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Interview with Stephen Ridlington, CFO of Abu Dhabi National Energy (TAQA)

Stephen Ridlington, CFO of Abu Dhabi National Energy (TAQA), speaks with Acuris Capital Intelligence about the ADX-listed energy group’s approach to capital management and the ongoing impact of COVID-19.

Interview by Siddesh Mayenkar

Q. How do you think the impact of COVID-19 will affect how you manage liquidity in the future?

We have always taken a proactive approach to liquidity management to ensure we can meet our obligations. In December 2019, we secured a US$3.5 billion revolving credit facility from local, regional and international banks to access funding on short notice, if required.

Our cash needs have turned out to be modest as oil prices have recovered from their lows in April. However, this year has reminded us of the importance of proactively managing our liquidity needs. We are in a strong position, with more than US$1.2 billion in cash and US$1.7 billion of undrawn committed facilities as of 30 June, 2020.

Q. What do you monitor to ensure your firm has adequate liquidity?

Ultimately, this comes down to having a solid cash-forecasting system in place to understand what our funding needs will be. It is important to “cash plan” on a conservative basis and to ensure we have access to funding levels that will sustain us in worst-case scenarios.

Q. Have you seen any differences in accessing capital markets since March?

We have not had a need to access the capital markets during 2020 as our liquidity position has remained strong and TAQA does not have any significant debt maturities this year.

Since May, following stimulus and assurances from global central banks, the backdrop in capital markets has improved significantly. TAQA’s bond spreads to the Abu Dhabi sovereign curve returned to pre-COVID-19 levels. They further tightened following the strong credit rating upgrades that the company received upon completion of the transaction to combine all of Abu Dhabi Power Corporation’s power and water assets with TAQA on 1 July, 2020.

While the group has not accessed the debt capital markets in 2020, our subsidiary, TAQA Morocco, recently finalised a private bond placement of US$290 million, diversifying its funding base. The placement, open only to qualified institutional investors, was over-subscribed and reduced the cost of our debt by over 20%, as well as extending the tenor of the debt by 11 years, to March 2038.

Q. Are you seeing changes in what’s being pitched by advisors in this environment?

Utilities companies have proven their resilience over the past six months. TAQA’s substantial new scale within this segment has positioned us well to continue our growth trajectory, while demonstrating our resilience. We have seen some sub-sectors perform better, including a continued interest in renewables with their valuations unchanged or increased during this period.

TAQA has seen many growth opportunities—greenfield and inorganic—that have been brought to us by advisers and we continue to screen and assess them.

Background: Stephen Ridlington is TAQA’s chief financial officer, a position he has held since July 2020. Prior to this, he was the chief investment officer at Abu Dhabi Power Corporation. He previously held positions with BP, TNK-BP and the National Central Cooling Company PJSC (Tabreed), serving as CFO at the latter.

This interview has been edited for clarity and length.