Al Suwadi Power and Al Batinah Power, Oman's two largest gas fired power plant operators, have both launched initial public offerings (IPOs) on the Muscat Securities Market (MSM) offering 35% of the shares for sale.
The IPO was opened on May 11th and is scheduled to finish on June 9th. Bank muscat is the financial adviser and issue manager for both the Al Batinah Power IPO and the Al Suwadi Power IPO.
Both power firms are owned by a consortium made up of GDF Suez (46%), Suhail Bahwan Group (22%), Sojitz Corporation (11%), Shikoku Power Co (11%) and Oman's Public Authority for Social Insurance (10%).
The partners will reduce their holdings pro rata with GDF Suez dropping to around 30% of the share capital of both companies after the IPOs.
The operators aim to raise around US$78.5 million from the sale of shares in Al Batinah and US$84.5 million from the flotation of Al Suwadi.
Jurgen De Vyt, CEO of Al Batinah Power, and Przemek Lupa, CEO of Al Suwadi Power, said in a joint statement:
Both Al Batinah Power and Al Suwadi Power benefit from stable and predictable cash flows. This is on account of their revenues being contracted on an availability basis with OPWP (Oman Power and Water Procurement), which is owned by the Government of Oman, pursuant to a 15 year Power Purchase Agreement (PPA) that expires in March 2028. Each company also benefits from a gas supply agreement with the Government of Oman over the same period.
Owing to the well-tested and proven back-to-back contractual framework, neither company is exposed to changes in gas prices and to fluctuations in power demand for power until 2028, thereby offering returns that are unaffected by market downturns.
Al Suwadi Power Company owns and operates the Barka 3 plant, a gas-fired combined cycle power generation plant with a contracted power capacity of 744 MW, located approximately 80km northwest of Muscat in Oman.
Al Batinah Power Company owns and operates the Sohar 2 plant, a gas-fired combined cycle power generation plant with a contracted power capacity of 744 MW, located approximately 200km northwest of Muscat in Oman within the Sohar Industrial Port area.
Under the contracts agreement with government owned Electricity Holding Company (EHC) a public offering had to take place one year after the plants were commissioned which happened on schedule in April 2013.