China State Power Investment snaps up Pacific Hydro
- Details
- Category: China
- Created: Wednesday, 16 December 2015 10:54
- Written by Angela Macdonald-Smith - Sydney Morning Herald
Pacific Hydro's broad portfolio of wind farms and hydropower projects in Australia and overseas has been snapped up by China's giant State Power Investment Corporation, which beat a number of local and overseas rival bidders in a hotly contested sales process.
In a deal thought to be worth more than $3 billion including debt, the Chinese state-owned firm will buy Pacific Hydro from fund manager IFM Investors, which had owned the business since trumping Spain's Acciona in a $725 million takeover deal in 2005.
Chinese firm State Power Investment Corporation will buy Pacific Hydro from fund manager IFM Investors for about $3 billion.CREDIT:BLOOMBERG
The transaction counts among the largest acquisitions in Australia's energy sector by a Chinese government entity, alongside State Grid Corporation's purchase last year of a majority stake in gas pipeline owner Jemena.
The deal comes amid heightened sensitivity about Chinese acquisitions of Australian infrastructure, after the long-term lease of Darwin port to privately owned Landbridge and keen Chinese interest in NSW electricity network owner Transgrid. This sale has however already been approved by the Foreign Investment Review Board, according to sources.
IFM put Pacific Hydro up for sale earlier this year after taking a $685 million write-down on the business in 2014 to account for the uncertainty that had engulfed the renewable energy sector amid the review of the 2020 renewable energy target. The business owns 900 megawatts of generation capacity across 19 hydropower dams and wind farms in Australia, Chile and Brazil, as well as a significant pipeline of wind projects and potential wind sites in Australia, which have a better chance of going ahead after a revised renewable energy target was finalised earlier this year.
Future growth
IFM Investors' head of infrastructure Kyle Mangini said the fund had "invested heavily in growing the business over the last 10 years." He said he wasn't surprised at the level of interest from bidders and voiced confidence the Chinese buyers would continue expanding the business.
For SPIC, which owns some $US113 billion of assets in 25 countries, including over 100 gigawatts of generation capacity, the acquisition is relatively small. The firm, formed from the merger of China Power Investment Corporation and State Nuclear Power Technology Corporation, is not thought to have any other interests in Australia.
Chairman Wang Bingua said SPIC "is committed to maintaining the stability of Pacific Hydro's current business and management team, as well as supporting expansion through the pipeline of development projects."
The Chinese player won Pacific Hydro over rivals including Pacific Equity Partners, Norway's Statkraft and New Zealand's Morrison & Co.
Some bidders are understood to have sought individual parts of the business, with some attracted by Pacific Hydro's Australian portfolio, and others by the South American assets. The winning bid is understood to have narrowly beaten an alternative of separate sales of assets to two or three bidders, and provided a cleaner and simpler exit for IFM.
Source : https://www.smh.com.au/business/china-state-power-investment-snaps-up-pacific-hydro-20151216-glp7cg.html
