Pacific Hydro purchase shows value of Aussie renewables

State Power's Pacific Hydro purchase underlines value of Australian renewables, Bogoievski says

By Jonathan Underhill

Dec. 17 (BusinessDesk) - State Power Investment Corp of China's purchase of Australia's Pacific Hydro, reportedly for more than A$3 billion including debt, underlines the value of that country's renewable energy assets, says Marko Bogoievski, chief executive of Infratil, which had been eyeing the business.

Government-owned State Power beat out multiple bids to buy Pacific Hydro both as a whole and for various of its assets in Australia and South America from vendor IFM Investors. Pacific Hydro has 19 hydro-electric and wind generation operations, with combined capacity of 900 megawatts.

"We were interested in it," Bogoievski said. "One thing it does confirm is how valuable some of these renewable assets are in the Australian market."

Infratil has a position in the Australian market via its 51.1 percent holding in Trustpower, which has two Australian wind farms and is actively identifying and developing potential sites in South Australia, New South Wales and Victoria. Trustpower says Australia's sustainable generation is "so important" because the country's per capita carbon dioxide emissions are among the world’s highest, largely due to reliance on fossil fuels for energy, while the federal government is committed to a target of getting 20 percent of electricity supply from renewable sources by 2020.

Bogoievski says "the mood has changed" in Australia regarding renewables since Malcolm Turnbull ousted Tony Abbott as prime minister. Abbott had cut back on incentives for renewable energy and had planned to dis-establish state agencies set up to invest in and promote clean energy.

Last month Bogoievski said Pacific Hydro's "breadth of generation assets and development pipeline is diversity of generation assets and jurisdictions makes it well suited to Infratil’s active management capability."

Still, Infratil's strength was in greenfield developments more than existing assets and the investment group "has a nice combination of capital and ability," Bogoievski said today. Australia "has a fairly rich set of renewable opportunities and there is a lot of wood to chop in that market."

He declined to be specific about potential targets. "There's a number of opportunities. We will see how they play out in 2016," he said.

Infratil, which is managed by Wellington-based Morrison & Co, has cash reserves exceeding $755 million, including profit from the sale of Z Energy and the proceeds of bond sales.

China's State Power has US$113 billion in global assets including power generation, coal and finance. The company said in a statement that it 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.”

Infratil's shares last traded at $3.14 and have gained 6.7 percent this year.

(BusinessDesk)

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