Saudi PIF said to be eyeing stake in ACWA Power

Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), might buy a stake in Riyadh-based ACWA Power, Reuters reported, citing unnamed sources familiar with the matter.

PIF already owns a 13.7 percent stake in ACWA, a global operator of power and water plants, through its subsidiary Sanabil Investments. The fund last month invited investment banks to pitch for the role of advisor on a potential deal with ACWA, the news agency reported.

Talks are at a preliminary stage, and neither party has appointed an advisor, two of the sources said.

It is not clear yet whether the new investment would be structured as a stake increase by Sanabil or if the PIF will take a direct stake.

According of one of the sources, the fund might increase its total holding to between 25 percent and 35 percent.

Other shareholders in ACWA include Saudi's Public Pension Agency, which bought a 5.7 percent stake at the same time as Sanabil, and World Bank unit International Finance Corporation, which invested $100 million for an undisclosed holding in mid-2014, the report said.

The PIF is seen as a key driver of the kingdom's Vision 2030 plan to diversify the economy, with the target of turning it into the world's largest sovereign wealth fund.

The fund has had a part in a number of domestic investments in recent months– ownership of a stalled financial district project in Riyadh is to be transferred to the PIF, and it is expected to make an investment into King Abdullah Economic City, the report said.