Instrata takes 8% stake in Oman water project

The Bahrain-based fund manager has closed an investment in the Barka 1 Independent Water and Power Project (IWPP). The deal is Instrata’s second investment in a Middle Eastern IWPP and comes ahead of fundraising for a planned second fund.

Instrata Capital, the Bahrain-based infrastructure fund manager, has spent an undisclosed sum to acquire an 8 percent stake in Oman’s Barka 1 Independent Water and Power Project (IWPP). The firm invested alongside ACWA Power International, a Saudi Arabian developer, owner and operator of IWPPs, which acquired a 58 percent stake.  

The 456-megawatt, combined cycle gas turbine power and water desalination facility is located to the northeast of the Oman capital of Muscat. The facility has been operational since 2003 on a Build, Own and Operate (BOO) model. It meets 11 percent of Oman’s electricity needs and 17 percent of its water demand and has a long-term power and water purchase agreement with Oman Power and Water Procurement Company.

“The Barka 1 IWPP is considered a benchmark throughout the Middle East as it was one of the first privately developed combined water and power projects to be established using the Build, Own, Operate model,” said Suhail Hajee, chief executive officer of Instrata Capital, in a statement. “The BOO model has since been used successfully in a number of new IWPP and IPP projects around the region.”

The investment is Instrata’s second in a regional IWPP project, following a $27 million commitment to the Al Dur project in Bahrain in November 2009.

In the statement announcing the Barka 1 investment, Instrata said it is “considering launching a second GCC/MENA and Turkey focused fund” pending local regulatory approvals.

Instrata Capital was founded in 2007 with the backing of the Kuwait Investment Company. It manages the Bunyah GCC infrastructure fund, the only shari’a compliant infrastructure fund focused on the Gulf Cooperation Council (GCC) countries. The fund had initially set out to raise $400 million although the final amount raised was not disclosed.

In February this year, Instrata Capital co-founder Simon Monk, a former investment banker at UBS, announced he had left the firm and relocated to London where he was considering his options. He cited family commitments for the move.