Taqa to double capital to Dh8bn

The Abu Dhabi National Energy Company, or Taqa, has approved plans to double its capital to more than Dh8 billion as the company pushes ahead with an aggressive investment drive to achieve its asset target of $60bn.

The company also announced yesterday it had signed an agreement to acquire 50 per cent of a key Moroccan renewable energy company and is negotiating for the purchase of new assets in the North Sea.

Taqa's board and general assembly endorsed the plan last week to issue Dh4.15bn in convertible bonds to shareholders and investors outside the company to double the capital by the start of September.

Dealers said such a large bond issue meant the company is on the verge of a major programme that involves acquisitions and other investments.

"The latest bond issue will double Taqa's capital from Dh4.15bn to Dh8.3bn. We expect a big demand for such bonds given Taqa's high performance and strong financial position and reputation," said Karim Helmi, an analyst at the Abu Dhabi-based Emirates Securities Company.

"The bond issue is quite clear. There is no interest on the bonds and the offer of bonds to non-shareholders means the company wants to expand the capital base among investors, who will also benefit from buying those bonds. This large rise in capital is intended to fund major expansion plans."

The government-controlled Taqa, one of the largest energy investment companies in the Middle East, said its board endorsed a general assembly decision last week to issue the bonds in Dh1,000 denominations.

The board set a period of 10 days starting on July 1 for the issuance of the bonds and September 1 for their conversion into shares. Each of the bonds will be issued in a denomination of Dh1,000 and will covert into 500 shares at a conversion ratio of 2:1 on September 1, according to the statement.

Taqa issued nearly $2bn (Dh7.3bn) in bonds last year to finance its acquisition drive. Announcing its financial results for 2007 last month, it said its total revenues jumped by 72 per cent to a record Dh8.3bn, while net earnings shot up by 113 per cent to more than Dh1bn.

Net profits for the first quarter of 2008 also leaped by 525 per cent to Dh398 million from Dh64m in the same period of 2007. Company officials said they expected another record year in 2008 following the completion of acquisition transactions finalised over the past year in some countries.

The company has set a target to boost its assets to $60bn and become a key player in the global energy industry. In an earlier statement last week, Taqa said the bonds would be offered only to shareholders but it later issued another statement to the Abu Dhabi Securities Market, saying non-shareholders are also eligible to buy. "The second statement created some confusion among investors in the Abu Dhabi stock market last week," Al Fajr Securities Company said. "The company first said the bonds would be offered only to shareholders and some investors saw this announcement as a dividend to shareholders not a capital increase."

In its statement yesterday, Taqa said it signed an agreement on June 10 to acquire 50 per cent of Compagnie Eolienne du Détroit (CED), which is controlled by the Paris-based Theolia, a leading European renewable energy company.

It said the agreement includes the studying the possibility of optimising wind sites in Morocco, notably the Abdelkhalek Torres wind farm near the current CED site. Another deal with Theolia involves the creation of a consortium of these two pre-qualified companies to respond jointly to the international invitation to tender for the construction and operation of a 300MW wind farm located in Tarfaya, Morocco, the statement said.

"Today's announcement is a real milestone for Taqa; it marks our first step into renewable energy," said Peter Barker-Homek, Taqa CEO.

"Our strategy is to diversify across the energy value chain in different territories, and by joining forces with Theolia in CED we feel that we are in a good position to bid for the new wind farm capacity. This is truly in line with our growth strategy and my vision for the company," he said.

In another letter to Abu Dhabi Securities Exchange, Taqa said it had entered into negotiations with Shell UK and Esso Exploration and Production (Exxon Mobil) for the purchase of the assets situated in the northern part of the North Sea.

"We are expecting to close this transaction during the third quarter of 2008.Taqa is currently studying many transactions and acquisitions which are still in their preliminary stages."

Speaking to reporters last week, Barker-Homek said Taqa is considering new acquisition deals worth around $5bn in North Africa and the West.