New Dhs200bn utility company under consideration in Abu Dhabi

The Abu Dhabi National Energy Company (TAQA) and Abu Dhabi Power Corporation (ADPower) which owns most of the water and electricity assets across Abu Dhabi are on the verge of a merger.

In a press release on its website, TAQA confirmed that its board of directors had received an offer from ADPower yesterday.

The deal envisages ADPower’s transfer of a majority of its water and electricity generation, transmission and distribution companies to TAQA in exchange for 106.3bn shares.

If the merger takes place, AD Power will own 98.6 per cent of TAQA’s entire share capital, thereby valuing TAQA at Dhs4.16bn – a 40 per cent premium to its current market cap of Dhs2.9bn.

The combined entity will have total assets worth Dh200bn, with more than 85 per cent of its revenue coming from regulated and contracted businesses.

The deal is subject to approvals from Abu Dhabi Department of Energy (DoE), the Securities and Commodities Authority (SCA) and TAQA shareholders and is expected to receive approvals in the second half of 2020.

Citigroup and Rothschild are financial advisers to ADPower, while Allen & Overy is the legal adviser.

If successful, the merger will result in TAQA becoming one of the largest listed companies on the Abu Dhabi stock exchange.

Jasim Husain Thabet, chief executive officer and managing director of ADPower, said, “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.”

Thabet also stated that ADPower were in the process of finalising three other projects in the UAE including a new 2.4 GW Combined Cycle power plant in Fujairah, a 2 GW solar photovoltaic power project in Abu Dhabi and a 200 million imperial gallons per day project in Taweelah, Abu Dhabi that will be the world’s largest reverse osmosis desalination plant.