HIGHLIGHTS
CLIENT: ACWA Power International
BUSINESS OBJECTIVES:
Introduce sophisticated hedge accounting and valuation capabilities
REQUIREMENTS:
- Flexible hedge accounting solution for managing a portfolio of 350 trades
- Comprehensive hedge effectiveness reporting for improved business decisions
- Strong documentation capabilities for addressing auditor queries
“The reports generated by FINCAD are detailed, and easily understood by our internal users, as well as our internal and external auditors."
Umair Shahid, Manager of Financial Accounting and Reporting, ACWA Power
Background
ACWA Power is a leading developer, investor, co-owner and operator of power generation and water desalination plants with presence in 11 countries. Headquartered in Saudi Arabia, ACWA Power’s portfolio has an investment value in excess of USD 32 billion.
Challenge
ACWA Power required a robust hedge accounting solution that could help them accurately and efficiently manage a portfolio of more than 350 interest rates swaps and FX contracts. Another requirement was support for the organization’s plans to enter into more complex derivatives such as interest rate collars, caps and floors, and options instruments. ACWA Power also wanted the ability to set up proxy hedges and incorporate sophisticated benchmark indices and rates.
Solution
ACWA Power selected FINCAD for hedge accounting, which offers a straightforward, cost-effective solution for derivatives valuation and hedge accounting.
Results
Greater Consistency: ACWA Power has established greater consistency in their hedge accounting workflow. “Conducting hedge effectiveness tests could easily demand numerous manual hours given that we have more than 350 trades. However, the FINCAD solution allows us to define a process and make it repeatable, helping us introduce greater efficiency and enforce consistency across all of our projects," said Pramitha Ranshika, Executive Manager- Accounting, Reporting & Treasury Operations, ACWA Power Group.
Time-savings: Umair Shahid, Manager of Financial Accounting and Reporting, elaborated on the time-savings created by using FINCAD. “Without FINCAD important tasks such as setting up a SIBOR hedge effectiveness relationship, testing it, and generating the valuations would have taken two weeks to accomplish. However, using FINCAD these tasks are completed in a matter of a couple hours."
Simplified Administrative Tasks: FINCAD has provided strong documentation capabilities that have reduced the time ACWA Power staff spends on administrative tasks such as relaying derivatives trading results to their subsidiaries, and addressing auditor queries.
Straightforward Interface: Users have been impressed by FINCAD's ease of usability. “The interface is quite user-friendly. We’re able to easily upload trade data and, from there, the FINCAD tool will automatically generate accurate results via market data that it captures,” stated Umair.
Robust Reporting: ACWA Power has also benefitted from comprehensive hedge effectiveness reporting. “The reports generated by FINCAD are detailed, and easily understood by our internal users, as well as our internal and external auditors. Making any necessary amendments to our underlying profiles is easy,” concluded Umair.
“Without FINCAD important tasks such as setting up a SIBOR hedge effectiveness relationship, testing it, and generating the valuations would have taken two weeks to accomplish. However, using FINCAD these tasks are completed in a matter of a couple hours.”