Saudi water and wastewater specialist Tawzea is aiming to raise capital through a listing on the country’s parallel exchange (Nomu) after two years of development that have seen it become one of the country’s leading water infrastructure investors.

Chief executive Mohammed Halawani told GWI this month that the company’s long-term goal following a listing on Nomu is to create a domestic wastewater investment powerhouse in the mould of the dominant position achieved by compatriot ACWA Power in desalination and renewable energy development.

Tawzea was established in 2006, and has built up a portfolio of operations and maintenance contracts and long-term concessions serving industrial cities and developers, with annual revenues in the region of SAR280 million ($75 million).

Over the past two years, however, it has pushed aggressively to win its fair share of the wave of privately financed municipal wastewater treatment projects that have come to the market.

“This is a good opportunity for us to focus, because there is no clear local leader in the market in the way there is for desalination,” Halawani said.

In September this year, the team of Tawzea (35%), Acciona (35%) and Tamasuk (30%) was awarded the contract to finance, build and operate three wastewater treatment plants: Medina 3 (200,000m³/d), Buraidah 2 (150,000m³/d) and Tabuk 2 (90,000m³/d). As well as the equity ownership, Tawzea will take a key role in the operations of the plants alongside Acciona.

It was the second round of privately financed independent sewage treatment plants (ISTPs) launched by the Saudi Water Partnership Company (SWPC), the country’s central water privatisation authority, as part of the infrastructure privatisation drive that forms part of the Vision 2030 national economic reorganisation.

The announcement came shortly before Tawzea and its partner Cobra secured financial close on the contract it won as part of the first wave of ISTPs, the 270,000m³/d Taif plant awarded in late 2019.

The SWPC is planning to tender at least six more large ISTPs by 2025, as well as packaging and awarding contracts to finance, build and operate large numbers of small plants on a regional basis. With four of the six privately financed wastewater projects to be tendered so far in the bag, Halawani is bullish over the prospects of the company continuing its dominance – particularly if it can secure expanded capital for its investment ambitions.

We have big plans of projects for 2030, so we need to increase the capital of the company. This is basically one of the major reasons for us to be listed,” Halawani said. “There is also the benefit of improving the governance of the company – to have more international partners and gain that knowledge.

Details of the IPO have yet to be confirmed by Tawzea’s two Tadawul-listed Saudi parents, industrial development group Saudi Industrial Services Company (SISCO) and pipe manufacturer Amiantit.  Halawani said, however, that he is confident investors will be receptive after a strong year for water on Tadawul. The Saudi stock exchange is currently celebrating a buoyant year for new entrants, and water is starting to carve out an established niche on the exchange. In October, ACWA Power raised $1.2 billion through a blowout sale of 11.1% of the company, while in February, robust demand saw operator Alkhorayef Water and Power Technologies raise more than SAR500 million ($133 million) through a 30% flotation.

Halawani pointed out that this would be the first chance for investors on the Saudi bourse to gain exposure to assets in the wastewater market.

In the future, alongside the expected new ISTPs to come, the company also hopes to secure a place among the companies taking on the regional management ‘cluster’ contracts being awarded as part of the reorganisation process for national water and wastewater utility the National Water Company.

Three of the six regional management contracts that will eventually pave the way for full-service utility concessions have already been awarded to international teams, and Tawzea is keen to secure one of the remaining contracts, which are scheduled to be awarded by the end of the year.

It is also looking to play a role in the nascent plans for private sector involvement in environmental programmes for treated wastewater reuse and sludge handling, both of which are currently under consideration by the Saudi authorities.