First Kuwait PPP project to list is well-received by investors

The 50 per cent share offer in Shamal Azzour Al-Oula saw a subscription rate of 127 per cent

A fishing boat passes in front of the Kuwait City skyline September 11, 2010. REUTERS/Stephanie McGehee (KUWAIT - Tags: CITYSCAPE)
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The Kuwait Authority for Partnership Projects (KAPP)’s public offering of its stake in Shamal Azzour Al-Oula, the operator of the Az-Zour North One power and water plant, generated strong investor interest with 127,000 Kuwaitis signing up to subscribe for shares.

The offering is the first Public Private Partnership project to come to market. Under rules governing these schemes, shares in the companies that own projects need to be offered to the public. Some 50 per cent of Shamal Azzour Al-Oula shares have been offered from October 1 to November 29, KAPP said in a statement.

“The public offering is mandated by the IWPP (Independent Water and Power Producers) and PPP (Public Private Partnership) Laws, which form an integral part of an overarching government effort to include citizens in the ownership of mega projects that are offered to private sector institutional investors”, KAPP said in the statement.

“In addition to providing attractive investment opportunities to citizens, PPP projects empower the private sector to take the lead in growing the national non-oil economy.”

The remaining 50 per cent of the company’s shares continue to be owned by its current shareholders: 40 per cent held by Azour North One Holding Company, comprising a consortium of investors including Engie, Sumitomo Corporation and AH Al Sagar & Brothers; 5 per cent by Kuwait Investment Authority; and 5 per cent by the Public Institution for Social Security.

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Power and water produced by the company is supplied entirely to the national power and water grid operated by the Kuwait Ministry of Electricity and Water (MEW), under a 40-year long-term Energy Conversion and Water Purchase Agreement.

Az-Zour North One power and water plant commenced commercial operations in November 2016 and currently supplies about 10 per cent of Kuwait's installed power generation capacity and about 20 per cent of the country’s installed water desalination capacity.

Advisers for KAPP’s IPO were Watani Investments Company (NBK Capital) as lead adviser, Kuwait Clearing Company as technical adviser and International Counsel Bureau as the legal adviser.