The board of the Abu Dhabi Power Corporation (ADPower), a public joint-stock company that owns most of the water and electricity assets across the Emirate, has submitted an offer to transfer a majority of its water and electricity generation, transmission, and distribution companies to the Abu Dhabi National Energy Company (TAQA).
They operate approximately 80,000km of electricity transmission and distribution network, as well as approximately 20,000km of water pipelines, serving more than one million customers.
The combined entity will be one of the largest GCC utilities companies and a top 10 integrated utilities player in the EMEA region by regulated assets.
ADPower intends to maintain TAQA’s existing listing, making the combined group one of the largest listed companies on the Abu Dhabi Exchange (ADX), which also marks the first time an integrated utilities company is made available on the UAE public market.
The electricity generation, transmission, and distribution firms that ADPower is proposing to transfer to TAQA reported a total net income of USD1.3 billion (AED4.8 billion) and total assets of USD32.6 billion (AED120 billion) as of end-2018.
The transferred companies have a generation capacity of approximately 4.9GW of electricity and approximately 58 million imperial gallons of water per day.
The asset swap deal would value at USD1.131 billion (AED4.156 billion). After the conversion, ADPower would own 98.6 percent of the entire issued share capital of TAQA.
ADPower said it would transfer the majority of its water and electricity generation, transmission, and distribution companies to TAQA in return for 106,367,950,000 convertible shares in the latter.
The proposed transaction will result in the creation of a USD54.4 billion (AED200 billion) of guaranteed monetary flow.
In addition, the combined entity will play a key role in delivering the UAE Energy Strategy 2050, which includes deriving 50 percent of the country’s total energy mix from clean sources and reducing the carbon footprint of power generation by 70 percent.
Commenting on the announcement, chairman of ADPower Saif Mohamed al-Hajeri, said: “The proposed transaction is an integral part of Abu Dhabi’s overall strategy to optimize performance across the water and electricity sector and to further support the growth of the UAE capital markets. This will bring an integrated utilities company to the UAE public market for the first time and will provide investors with an opportunity to invest in high-quality and secure assets for long-term growth.”
Sharing his thoughts on the combined entity, the chief executive officer and managing director of ADPower, Jasim Husain Thabet, said: “The new entity will be robust and primed for further growth in the UAE and internationally. With that in mind, and on the basis that the transaction completes, it is our intention to increase the free float of the company through a follow-on public offering.
We are also in the process of finalizing three landmark projects in the UAE. This includes a new 2.4GW combined cycle power plant in Fujairah and a 2GW solar photovoltaic power project in Abu Dhabi, along with a 200 million imperial gallons per day project in Taweelah, Abu Dhabi that will be the world’s largest reverse osmosis desalination plant.”
If the board and the shareholders of TAQA recommend the offer, then ADPower will close the transaction during the H2 2020, subject to the receipt of required regulatory approvals.
