UAE’s Utico plans $500m sukuk to pay down debt

The company agreed a $400m rescue deal for Singaporean water treatment firm Hyflux in November

Utico's chief executive Richard Menezes.  The UAE based utility company is planning to issue a $500 million sukuk. Antonie Robertson/The National

UAE-based utility company Utico is sounding out investors ahead of a proposed $500 million (Dh1.83 billion) benchmark sukuk, which will be used to pay off some of its debts and restructure its portfolio.

“The response has been positive. We intend to move quickly and ensure that we complete the process in the next three-to-four months,” Richard Menezes, chief executive of Utico, said in a statement.

Raising money through sukuk will help the company improve its services and restructure to position it for new opportunities like Dubai’s Hassyan Independent Water Project, a 120 million imperial gallons per day independent water plant being commissioned by the Dubai Electricity and Water Authority, Mr Menezes said. It is also bidding for new utility projects in the UAE, Saudi Arabia and Oman, he added.

Utico’s business spans water supply, desalination, power generation and transmission as well as solar plants in the UAE. Sovereign entities from Saudi Arabia, Bahrain, Oman and Brunei are investors in the company, which is part of the Abu Dhabi-based RMB Group.

“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 added.

The company said it has a very low debt-to-equity gearing ratio of 0.5, compared to an industry average of 3.

“We have excellent assets, cash and [a] stable dividend payout history which should be attractive to investors in this low return, high-risk market," he said.

In November, Utico took a 95 per cent stake in the struggling Singapore-based water treatment company Hyflux, with a total investment of $400m.

Utico last year announced a $400m investment from Majis Industrial Services, an Omani government entity, which took an undisclosed minority stake. It also previously received $145m of investment from Asma Capital in 2017.