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New Silk Road Finance Awards

Middle East and Africa: Best Individual BRI Project or Initiative in the Region 2020

The Silk Road Fund’s acquisition of a 49% stake in Acwa Power Renewable Energy

One of the less-mentioned shifts in the Belt and Road Initiative over the last few years has been in the ability of mainland lenders and corporates to adapt to a complex and ever-changing world.

Take the deal, finalized in April 2020, in which the Silk Road Fund, a Beijing-based state agency, bought a 49% stake in Acwa Power Renewable Energy Holdings, a Riyadh-based firm that manages and owns renewable power facilities and desalination plants across the Middle East, in important Belt and Road markets.

The deal makes sense on many levels. Funded by Bank of China and other state-run mainland lenders, it plugs the Silk Road Fund into one of the Middle East’s largest investors in a fast-growing sector. Acwa oversees $5.7 billion worth of investments in renewables – solar and wind – with an aggregate capacity of 1,668 megawatts; these provide power to more than 1.1 million homes.

The due diligence, co-led by Bank of China, was complex and onerous. It required the Beijing-based lender to scrutinize eight assets spread across five countries, and to work with the Silk Road Fund and its advisers to ensure all projects were environmental, social and governance-compliant.

In that sense, the Acwa-Silk Road deal also ticks a lot of other boxes. In its early days, the Belt and Road Initiative was often accused, including by influential voices in the Chinese capital, of funding environmentally unsound or unsuitable projects.

Beijing has listened to those complaints and shifted to focus on funding more projects that have less environmental impact, and which work to reduce, not increase, the amount of carbon in the soil, land and air. Nowhere is that adjustment more clear than in this project, for this award, and with this bank.

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