Saudi wealth fund hires HSBC for potential buy of ACWA Power stake

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), has hired HSBC to advise it on a potential purchase of a stake in ACWA Power, a developer and operator of power and water plants, sources close to the matter said.

Riyadh-based ACWA Power has chosen JP Morgan to advise it on the process, the sources, who spoke on condition of anonymity as the information is not public, said.

Saudi Arabia aims to expand the PIF into the world’s largest sovereign wealth fund as part of economic reforms prompted by lower oil prices. As a result, it has been linked with or completed a number of domestic and overseas asset purchases in the past few months.

PIF already owns a 13.7 per cent stake in ACWA through a subsidiary and last month asked banks to pitch for the role of advising it on a potential deal, sources told Reuters at the time.

PIF declined to comment when contacted by Reuters and ACWA was not immediately available to comment. HSBC and JP Morgan declined to comment.

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

One source told Reuters this month that PIF would like to raise its total holding to anywhere between 25 and 35 percent.

Another source said it was unclear whether the stake would be a direct investment by PIF or through PIF’s subsidiary, Sanabil Investments, which acquired its stake in ACWA in January 2013.

PIF, which last week said it had no plans to sell stakes in local companies, is set to take over a stalled financial district project in Riyadh and is also expected to make an investment into King Abdullah Economic City.

It made a $3.5 billion investment into ride-hailing app Uber, as well as announcing it would contribute 45 percent towards a $100 billion technology-focused fund with Japan’s SoftBank Group.