DUBAI, July 4 (Reuters) - Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), has taken a 15.2 percent direct stake in Riyadh-based ACWA Power, a developer and operator of power and water plants, the two announced in a joint statement on Wednesday.
The PIF already owns a 9.8 percent stake in ACWA through a subsidiary, Sanabil Direct Investments Company, bringing its total shareholding in the company to 25 percent, the statement said.
The investment will be in the form of a capital increase and proceeds will be used to "support ACWA's growth strategy and investment plan," it said.
Plans for the stake sale have been in the works since 2016, when the PIF hired HSBC to advise it on the purchase.
ACWA has also been planning to sell a 30 percent stake in an initial public offering in Riyadh by the end of the year and has hired JP Morgan, Citigroup, Natixis and Riyad Capital to advise on that process, sources have told Reuters.
Saudi Arabia aims to expand the PIF into the world's largest sovereign wealth fund, while also deploying its investments to boost strategic companies inside the kingdom in a bid to grow and diversify the economy.
ACWA is poised to be a main beneficiary of one pillar of that reform program, which is a plan to develop Saudi Arabia's power industry, particularly renewable energy.
In February the company won a contract to develop a 300 megawatt (MW) solar project in Sakaka worth $300 million, the kingdom's first such award as it prepares generate 9.5 gigawatts of electricity from renewable energy annually by 2023.
"(The PIF's) endorsement underlines the central role we play in the Saudi economy and our successful international expansion all geared towards achieving the objectives of Vision 2030," said ACWA chairman Mohammad Abunayyan, referring to the reform program. (Reporting by Marwa Rashad and Katie Paul; Editing by Mark Potter)