ABU DHABI, Dec 28 (Reuters) - Saudi Arabia’s top sovereign wealth fund is buying a stake in United Arab Emirates utility company Utico in a multi-million dollar deal, the chief executive of the UAE firm told Reuters on Wednesday.
Public Investment Fund (PIF) has entered into a binding agreement with private utility provider Utico Middle East to buy a “significant minority stake”, Richard Menezes said.
He declined to give the deal value, saying details will be published soon.
PIF has been looking at investments in Saudi and elsewhere across a range of sectors in recent months. It hired HSBC to advise it on a potential purchase of a stake in Riyadh-based ACWA Power, a developer and operator of power and water plants, sources close to the matter told Reuters in November.
The same month it said it planned to buy a major stake in Adeptio, the Gulf-based investment firm which controls retailer Kuwait Food Co (Americana).
“Our model of development is welcomed by Saudi Arabia that wants to replicate it in the Kingdom,” Menezes said, adding that Utico plans to enter Saudi in partnership with PIF.
Saudi Arabia is moving toward privatising its power and water projects and seeking to attract investors as it embarks on a wide-reaching reform of its economy in response to lower oil prices.
Utico, the only privately-owned utility in the UAE has a current capacity of 31 million gallons per day (mgpd) of desalinated water from four plants in the northern emirate of Ras al Khaimah.
The firm is building a new plant in Ras Al Khaimah with capacity of 24 mgpd in a joint venture with Spain’s Groupo Cobra with an investment outlay of $195.8 million. Two other existing plants are being upgraded to add a total of 10 mgpd capacity. (Reporting By Stanley Carvalho, editing by Louise Heavens)