x Abu Dhabi, UAEFriday 28 July 2017

Unit of Dubai Holding divests stake in Jordanian utility

Jordan's largest power company changes hands in a deal which will reshape the kingdom's rapidly growing power industry and help Dubai International Capital's efforts tackle its debt burden.

An affiliate of Dubai International Capital (DIC) has raised US$144 million (Dh528.9m) from the sale of a stake in a Jordanian utility.

Jordan Dubai Capital, the largest shareholders of which are DIC and Jordan's Social Security Corporation, sold its controlling stake in Central Electricity Generating Company to Saudi Arabia's ACWA Power International.

DIC, the private equity arm of Dubai Holding, reached an agreement with creditors in December over the restructuring of $2.5 billion of assets, which has led to a number of asset sales this year.

David Smoot, the chairman of Jordan Dubai Capital and the chief executive of DIC, said: "JD Capital will continue to concentrate on the development of its portfolio as well as look for future growth areas in Jordan in which to invest based on our belief that Jordan remains an attractive destination for regional and international investment."

The sale of Central Electricity, which was privatised in 2007, also marks a shift for Jordan's energy industry, which has been gearing up for rapid expansion.

"We are excited about this acquisition, which marks our entry into the second country [after Oman last year] outside our home market," said Mohammad Abunayyan, the chairman of ACWA Power.

The deal follows a number of asset sales by Dubai's government-related investment companies, many of which are attempting to reduce their debt burdens and conclude restructuring agreements, said Martin Kohlhase, a corporate analyst at Moody's Investors Service.

"I wouldn't be surprised that Dubai Holding and other Dubai entities [should] continue with their sales of assets, given the $10bn which needs to be restructured at Dubai Holding," he said.

"The disposal is in line with what they've done in the past," he added.

"It's part of their strategy to wind down their portfolio in an orderly fashion and use the proceeds to bring down their debt load."

Last month DIC sold its minority stake in Landis+Gyr to Toshiba, which paid a total of $2.3bn for the Swiss smart electronic grid maker.

In March, DIC announced the sale of its 45 per cent stake in KEF Holdings, a UAE-based manufacturer of valves and steel castings, to Tyco International for $178m.

DIC retains stakes in several large companies in Europe.

Dubai Holding, DIC's parent, is the investment arm of Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.