Abu Dhabi to see another merger among corporate giants

Abu Dhabi: Abu Dhabi Power Corporation (ADPower) has submitted an offer to Abu Dhabi National Energy Company (Taqa) that would see it transferring the majority of its water and electricity generation, transmission and distribution assets.

ADPower hopes to close the deal in the second-half of this year once Taqa shareholders recommend the switch. The proposed deal would create one of the largest utilities companies in the GCC and a Top 10 utilities player in the wider Europe, Middle East and Africa region.

With assets of around Dh200 billion, the combined entity would “benefit from highly predictable and secure cashflows, with more than 85 per cent of its revenue coming from regulated and long-term contracted businesses,” a statement said. It would also have a “robust” long-term capital structure with capacity to pay sustainable dividends to shareholders.

“The proposed transaction is an integral part of Abu Dhabi’s overall strategy to optimise performance across the water and electricity sector and to further support the growth of the UAE capital markets,” said Saif Mohammed Al Hajeri, chairman of ADPower.

As part of the deal, Taqa will keep its existing stock market listing, making the combined group one of the largest listed on Abu Dhabi Exchange. It is also the first time an integrated utilities company is made available on the UAE public market.

Follow on stock float

“The new entity will be primed for further growth in the UAE and internationally,” said Jasim Hussain Thabet, CEO and managing director of ADPower. “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.”

ADPower is proposing to transfer the majority of its water and electricity generation, transmission, and distribution companies, which together reported net income of Dh4.8 billion and total assets of approximately Dh120 billion as of end 2018.

“We are in the process of finalising three landmark projects in the UAE,” said Thabet. “This includes a new 2.4 GW Combined Cycle power plant in Fujairah and a 2 GW 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.”