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Abu Dhabi Is Said to Weigh Sale of $4 Billion Taqa Stake

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Manuel Baigorri and Dinesh Nair
·3-min read
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(Bloomberg) --

Abu Dhabi is weighing the sale of a stake in its biggest utility as the oil-rich emirate seeks more international investment in its marquee assets, people familiar with the matter said.

The government is working with an adviser as it considers selling about 10% of Abu Dhabi National Energy Co., according to the people, who asked not to be identified because the information is private. The stake in the company, known as Taqa, could be worth more than $4 billion based on its current market price.

Shares of Taqa were up 1.5% to 1.39 dirhams at 2:35 p.m. in Abu Dhabi on Wednesday, giving it a market value of about $43 billion. The sale could attract interest from large global utility companies and other financial investors, the people said. Initial non-binding bids are expected to be submitted in May, according to the people.

Investors may be attracted to Taqa’s plans to cut exposure to oil and natural gas assets and focus on renewables. The company wants to boost the portion of its power produced from solar and wind to 30% over the next decade. Taqa already owns one of the world’s biggest solar plants in Abu Dhabi and is in the process of building an even larger one.

The size of the Taqa stake being sold could change depending on investor interest, the people said. Deliberations are ongoing, and there’s no certainty they will lead to a transaction, according to the people.

A representative for Taqa declined to comment.

Regional Champion

The Abu Dhabi government has been pushing to turn Taqa, which has a monopoly on power and water distribution in the emirate, into a regional utility champion. Last year, Abu Dhabi orchestrated a plan for Taqa to receive assets from state-owned holding company Abu Dhabi Power Corp., known as ADPower, in return for stock.

Taqa Chief Executive Officer Jasim Husain Thabet reiterated last month the company intended to increase its free float through a follow on public offering. Taqa last year said it would permit foreign investors, which had previously been banned from buying its stock, to own almost half the company.

Abu Dhabi, the capital of the United Arab Emirates, has been seeking to attract foreign capital by selling stakes in some of its largest companies. In recent years, international and local funds have invested more than $20 billion in the operations of state-owned oil producer Adnoc. Taqa is also considering options for its oil and gas assets, including a potential sale, people familiar with the matter said in March.

Taqa issued $1.5 billion of bonds with seven and 30-year maturities on Tuesday. The company, rated Aa3 by Moody’s Investors Service, sold the longer notes with a yield of 3.4%.

(Updates with details of Taqa renewables push from fourth paragraph.)

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