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04 February 2020

Abu Dhabi Power plans to take control of TAQA in asset swap

The proposed transaction would create a new regional utility champion that will accelerate the transformation of the water and electricity industry in the UAE

ADPower plans to maintain TAQA’s existing listing, making the combined group one of the largest companies on the Abu Dhabi Exchange/Bloomberg

by Kudakwashe Muzoriwa

Abu Dhabi Power Corporation (ADPower) plans to take control of Abu Dhabi National Energy Company (TAQA) in an asset swap deal that would value it at AED 4.16 billion ($1.13 billion) and create a combined utility with assets worth $54.5 billion.

According to WAM, ADPower submitted to TAQA an offer with principal terms and conditions on which the firm would transfer the majority of its water and electricity generation, transmission and distribution assets in return for 106 billion convertible shares in the latter.

Dr. Ryan Lemand, Senior Executive Officer and Board Director of ADS Investment Solutions, said that the transaction will give equity investors greater access to key utilities in Abu Dhabi and it serves to deepen the pool of listed assets on the Abu Dhabi Securities Exchange.

The new entity would be one of the largest utilities companies in the GCC and a top 10 integrated utilities player in the EMEA region by regulated assets.

 “The additional assets would improve the stability and predictability of TAQA’s cash flows, and dilute the company’s exposure to its poorly performing oil and gas assets,” said Thomas Le Guay, a Moody’s Analyst.

Post conversion—contingent on the asset transfer being made—ADPower would own 98.6 per cent of the entire issued share capital of TAQA, in which the Abu Dhabi government currently has a 74.1 per cent share.

Abu Dhabi Development Holding Company-owned ADPower said that its offer implies an equity value for TAQA of AED 4.16 billion, which corresponds to an over 40 per cent premium to its current market cap of AED 2.9 billion.

“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,” said Saif Mohamed Al Hajeri, the Chairman of ADPower.

ADPower said that it plans to maintain TAQA’s existing listing, making the combined group one of the largest companies on the Abu Dhabi Exchange.

RELATED STORIES: TAQA ADPower Abu Dhabi Exchange





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