Utico, the Middle East’s leading full-service utility and the only private water and power company in the UAE, today said it is working with financial institutions and banks to raise a benchmark sized Islamic bond ($500 million) and tap the capital markets.
Richard Menezes, CEO of Utico, said the company has sounded out to several financial institutions, including Citi, for the sukuk issuance.
“These are times when the governments are doing a lot for the people, even when the oil prices are down, ensuring common good and we feel that with further capitalization, Utico too will be able to contribute more to the UAE and the region,” he said.
Utico has the lowest debt to equity gearing of 0.5 in the industry, a statement said.
Menezes said raising money to increase debt is not Utico’s core focus but to ensure sustainability, improve its services and restructure itself to position for new opportunities like Dubai’s Hassyan project and some other opportunities in Oman and Saudi Arabia.
The company’s capacity is increasing with footprint and overseas interest, and expansion on the way. Sovereign entities of Saudi Arabia, Bahrain, Brunei and Oman are already investors and shareholders in the company, it said.
Utico is also a developer, O&M and EPC company, other than providing various value-added services. It is acting now to grow its development and O&M business outside the four emirates it is currently engaged in and is now bidding for projects in the UAE, Saudi and Oman.
“To meet the current market conditions where opportunity and risks are both available in abundance, Utico is keen to position itself properly with restructuring its assets and corporate growth mix and seek capital market interest for a US$500m benchmark sized sukuk using its stable cash flows and dividend paying history,” it said.
The company will use the proceeds for corporate purposes. It is seeking a 10-year note for $500 million with $350 million firm and $150 million option. Utico will use the money to pay off some of its debts and restructure its portfolio and position itself for organic and inorganic growth.
“Utico has made continuous profits every single year for 15 years and has an excellent asset base and low gearing. We are the only private full services utility company in the region and hence Utico’s first entry into public capital markets will be an opportune time for investors to invest in a sustainable and profitable company,” he said.