ACWA Power's SAR7.12 Billion Rights Issue: A Catalyst for Renewable Energy Dominance and Long-Term Growth

In a move that underscores its ambition to become a global leader in renewable energy infrastructure, Saudi-based ACWA Power has launched a SAR7.12 billion rights issue—the largest capital raise in its history—to fund the expansion of its project pipeline and strategic acquisitions. This move not only aligns with the company's goal to triple its assets under management (AUM) by 2030 but also taps into the growing investor demand for ESG-aligned infrastructure assets. With a 4.63% dilution and CMA approval, the rights issue positions ACWA as a prime investment vehicle for investors seeking exposure to the decarbonization boom, backed by Saudi Arabia's Vision 2030.

Strategic Capital Allocation: Fueling Renewable Growth

The rights issue proceeds are strategically allocated to accelerate ACWA's renewable energy projects and expand its global footprint:
- SAR5.28–5.98 billion (74–84%) will fund current and future projects, including the 2.7 GW Al-Zour North IWPP in Kuwait—a 540,000 cubic meters/day cogeneration facility—and Saudi's ambitious projects under the National Renewable Energy Program.
- Up to SAR1.41 billion is earmarked for mergers and acquisitions, enabling ACWA to acquire stakes in emerging markets or partner with firms to develop green hydrogen, solar, and wind projects.
- SAR351 million supports general corporate needs, ensuring operational flexibility.

This allocation prioritizes high-growth sectors like solar and wind, which are critical to achieving Saudi's target of 50% renewable energy by 2030. The

epitomizes the company's vision.

Why 4.63% Dilution Matters

The rights issue's minimal dilution (4.63% of current capital) is a key investor advantage. With ACWA's market cap at SAR73.2 billion pre-issue, the 4.63% increase ensures shareholders retain significant value while enabling the company to scale operations without overburdening existing equity. This is starkly contrasted with dilutive equity raises in other sectors, making the rights issue a win-win for current and new investors.

Tailwinds: Regulatory Support and ESG Demand

The Capital Market Authority (CMA) approval removes a major regulatory hurdle, signaling confidence in ACWA's financial stewardship. Additionally, the rights issue benefits from:
- Saudi Vision 2030: The kingdom's push to reduce carbon emissions and diversify its economy aligns directly with ACWA's renewable energy focus.
- ESG Investing Surge: Institutional investors are increasingly allocating to infrastructure projects with clear climate benefits. ACWA's projects, such as the 1.5 GW Sakaka Solar Plant, are poster children for ESG investing.

The reflects this demand: despite a minor dip (1.4%) on the rights issue announcement, the stock has risen 29% year-to-date, outperforming the Saudi Tadawul All-Share Index.

Participating in the Rights Issue: A Long-Term Play

For investors, subscribing to the rights issue offers three compelling advantages:
1. Exposure to Decarbonization: ACWA's portfolio includes projects that directly contribute to reducing global carbon footprints, a theme likely to gain traction post-COP28.
2. Stable Cashflows: Renewable energy projects typically offer long-term power purchase agreements (PPAs), ensuring predictable revenue streams.
3. Upside from M&A: The SAR1.41 billion M&A fund could unlock undervalued assets in emerging markets, creating a compounding effect on AUM.

Risks and Considerations

While the rights issue is well-structured, investors should monitor:
- Project Execution: Delays in construction or regulatory hurdles in foreign markets (e.g., Kuwait's Al-Zour project) could impact timelines.
- Commodity Prices: Solar and wind costs are tied to materials like polysilicon and steel; a sustained price spike could squeeze margins.

Verdict: A Compelling Opportunity

ACWA Power's rights issue is a strategic masterstroke that leverages its leadership in renewable energy, minimal dilution, and regulatory tailwinds. With a track record of delivering 59% revenue growth (Q1 2025) and a 44% net profit jump, the company is primed to capitalize on its $25 billion project pipeline.

Investment Recommendation: Participate in the rights issue. The 4.63% dilution is negligible compared to the growth potential, and the alignment with ESG trends ensures demand remains robust. For long-term investors, ACWA's exposure to decarbonization and Vision 2030 makes it a cornerstone holding in energy transition portfolios.

The clock is ticking: with the Extraordinary General Meeting (EGM) on June 30, shareholders must act swiftly to secure their stake in ACWA's green future. This is not just a capital raise—it's an invitation to the next chapter of the renewable energy revolution.