Corrected: Exclusive - Saudi Arabia's ACWA Power invites banks to arrange IPO - sources

(Corrects monetary size of IPO, adds company statement)

By Hadeel Al Sayegh and Tom Arnold

DUBAI (Reuters) - Saudi Arabia's ACWA Power has invited banks to bid to arrange an initial public offer of its shares, which is expected to raise up to $1 billion, sources told Reuters on Wednesday.

ACWA Power, a developer of electricity and water projects in the Middle East, Africa and southeast Asia, sent a request for proposals to banks last week, the sources said, declining to be named because of the commercial sensitivity of the matter. The company did not immediately respond to a request for comment.

The firm could become one of the main beneficiaries of Saudi Arabia's effort to develop its power industry, particularly renewable energy. It is looking to sell a 30 percent stake to investors and list in Riyadh, two banking sources said.

One of the sources said the company was looking to raise between $800 million and $1 billion, while another estimated it would raise 3.5 billion riyals ($933 million) to 4 billion riyals.

The company said in statement to Reuters: "ACWA Power has consistently maintained that as its operating platform grows sufficiently to generate a stable and predictable revenue stream, the ownership of the company should be broadened to include the public.

"We will make announcements on this subject as and when we have something meaningful to say."

Saudi Arabia aims to produce 10 percent of its power from renewable sources in the next six years as it pushes ahead with a multi-billion-dollar plan to diversify its energy mix and free up more crude oil for export.

According to its own figures, ACWA Power's portfolio generates more than 22 gigawatts of power, with investments valued at over $30 billion.

ACWA has close relations with the Saudi government, with the country's top sovereign wealth fund, the Public Investment Fund, owning 13.7 percent indirectly through a subsidiary.

In November 2016, the Public Investment Fund hired HSBC to advise it on a potential purchase of an increased stake in ACWA. It is not clear whether that purchase might still go ahead.

ACWA said in September it aims to acquire one or two power generation companies owned by Saudi Electricity Co, whose assets are to be privatised.

(Additional reporting by Nawied Jabarkhyl, Saeed Azhar and Reem Shamseddine; Editing by Andrew Torchia and David Evans)