ACWA Power is a developer and operator of power generation and desalination plants sustaining organizations and populations across 13 countries in the Middle East and North Africa. The firm leveraged partner solutions to transition to in-house banking for its complex asset-based business model to reduce complexity and accommodate growth.
Like many firms with asset-based business models, ACWA Power relies on a complex corporate structure – comprising holding companies and special purpose vehicles (SPV) to manage capital allocation and financing, segregate operations and control risk. With a large corporate structure of 200+ entities, treasury was burdened with very high bank account administration and KYC overhead.
With an account landscape exceeding 600 across more than 65 banking relations, liquidity management required significant effort. Creating the foundation for a fully-automated and resilient treasury operating model built on centralization, ACWA Power, J.P. Morgan and other non-bank providers were mobilized to produce an integrated best-in-class solution, comprising in-house bank infrastructure, bank-agnostic connectivity and virtual accounts.
The solution ACWA Power implemented in its treasury transformation project was three-fold:
The key objectives ACWA Power achieved through the solution applied were:
Improved working capital from freed trapped cash and recovered ROI, a transition to a scalable, highly efficient centralized model with no business interruption, and 100% visibility over all bank accounts - both physical and virtual. The savings have already paid for the investment cost.
- ACWA Power Communications Department
ACWA Power’s pioneering project in Saudi Arabia – one of the most innovative bank solutions in recent years – produced impressive results for the firm:
Recovered ROI for the program in one year
The operational efficiencies realized by migrating to automated processes and introducing real-time cash pooling with virtual accounts slashed account maintenance fees by 50% and need for cross-border transaction fees for intercompany settlements by 30%
Increased utilization of existing working capital by 75%
Achieved 100% visibility over all accounts across the group and increased utilization of existing working capital by approximately 75% within the structure through the real-time cash pooling delivered by in-house bank centralization
Strengthened risk management controls
Strengthened transaction processing and AML controls through TMS screening module and eliminated operational risks from human error by transforming to entirely automated payment, reconciliation and intercompany management processes
Zero business interruption during COVID pandemic
Through integration of vendor (TMS), infrastructure (SCORE) and bank (VAM) solutions ACWA Power transitioned from a heavily manual to a completely automated cash management operation that saw no business interruption during COVID pandemic and the transition to work-from-home
The solution and demonstrable achievements realized by ACWA Power’s project can be replicated by other industries and businesses. The vendor, market infrastructure and bank solutions applied here to create a best-in-class treasury are affordably available to firms of all sizes – most notably, when SaaS models and strong global bank partners are used to provide the product and professional services to achieve the much desired result to transform treasury.
Contact your J.P. Morgan representative to learn more about how we can support your business.
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