Saudi sovereign fund considers buying stake in power firm

Its investment strategy aims to help government diversify Saudi economy away from oil into power and other sectors

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Saudi Arabia’s main sovereign wealth fund, Public Investment Fund (PIF), is considering buying a stake in Riyadh-based ACWA Power, which operates power and water plants around the world, sources familiar with the matter told Reuters.

PIF, which already owns a 13.7 percent stake in ACWA indirectly through a subsidiary, invited investment banks last month to pitch for the role of advising it on a potential ACWA deal, according to four sources, declining to be named due to the sensitivity of the matter.

Talks are still at a preliminary stage, and neither party has appointed an advisor, said two of the sources, who are based in the Gulf.

Privately held ACWA describes itself as an investor, developer, co-owner and operator of a portfolio of plants in Europe, Asia and Africa that generate more than 23 gigawatts of power and produce 2.5 million cubic meters of desalinated water a day.

The fund declined to comment, when contacted by Reuters on Monday. ACWA also declined to comment.

PIF’s investment strategy aims to help the government diversify the Saudi economy away from oil into power and other sectors.

PIF's subsidiary Sanabil Investments, which focuses on making direct equity investments in local companies and projects, acquired a 13.7 percent stake in ACWA in January 2013.

It is unclear how the new investment will be made at this stage: whether it would be structured as a stake increase by Sanabil or whether the PIF will take a direct stake, a third source said.

One of the Gulf-based sources said PIF would like to increase its total holding to anywhere between 25 and 35 percent.

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