Oman’s two largest power plants launch $163m IPO

Sohar 2 and Barka 3, which together have a combined capacity of 1.5GW, are backed by a consortium including GDF Suez and a local pension.

Al Batinah Power and Al Suwadi Power, the companies that own Oman’s two largest power plants, today announced their intention to float on the Muscat Securities Market.

Both IPOs involve the offering of 35 percent of the share capital of each company, with the combined proceeds due to reach close to RO63 million (€118 million; $163 million).

The companies’ founding shareholders include France’s GDF Suez, Tokyo-based trading house Sojitz, Japanese utility Shikoku Electric, Oman conglomerate Suhail Bahwan Group and state pension Public Authority for Social Insurance (PASI). GDF Suez will remain the largest shareholder upon completion of the transaction with a 30 percent holding.

Al Batinah Power owns and operates Sohar 2, a gas-fired combined cycle power generation plant with a contracted capacity of 744 megawatts (MW) located 200 kilometres north-west of Muscat. Barka 3, the plant operated by Al Suwadi, uses the same technology and has a similar generating capacity. It is located 80 kilometres north-west of the country’s capital.

Both plants, which represent a total investment of $1.7 billion, have been operating since the beginning of April 2013. Their 1,488MW combined capacity provides around 27 percent of the contracted power currently going through Oman’s grid.

The companies have an off-take and gas supply agreement with the Oman government expiring in 2028. The projected average dividend yield on an investment in either of them, at IPO price and excluding issue expense, is 8.1 percent over the next five years.