UPDATE: Engyco Plans IPO Seeking EUR1 Billion For Spain Solar
March 23 2010 - 11:21AM
Dow Jones News
A group of top executives from the European utilities and solar
power sectors said Monday they're preparing to float a company on
the London Stock Exchange with the aim of raising up to EUR1
billion to buy cheap solar power assets.
The executives aim to list their U.K.-based solar energy
developer, Engyco, to invest in existing power-producing
photovoltaic operations, initially in Spain.
The company, which already has agreements from vendors for
EUR640 million of solar assets in Spain with a capacity of 86
megawatts, is aiming to become the U.K.'s first listed independent
solar power utility. The planned listing offers London investors
the eventual exposure to a portfolio of solar power assets with an
attractive, long-term, fixed revenue stream, Engyco said.
Engyco aims to list in London at the end of April or in early
May to raise funds for cash purchases of solar assets, Engyco
Chairman John Roberts told Dow Jones Newswires. Roberts was chief
executive of FTSE 100 company United Utilities (UU.LN) and is a
non-executive director at independent electricity generator
International Power PLC (IPR.LN).
The company plans to buy 150 megawatts--including the 86
megawatts in asset-sale agreements already lined up--from among
Spain's total solar installed capacity of 3 gigawatts, if it raises
the full EUR1 billion. This implies a cost of EUR7 million a
megawatt, Roberts said.
"The opportunity that Engyco has identified is compelling and
the team which has been assembled to pursue it could not be
stronger," Roberts said in an earlier statement. "The assets which
we intend to manage enjoy both favorable operating conditions and a
highly attractive pricing regime."
The planned listing is a bold move, as solar companies globally
have suffered more than other sectors in renewable energy from the
financial downturn and the credit crisis. As a result, flotations
of such companies have been scarce.
But if successful, the company is looking to buy assets in Spain
that were created in 2008 and qualify for the generous
feed-in-tariffs available at the time.
The income streams from those projects are index-linked to
inflation at a fixed rate for 25 years. After a small step down in
the rate, the income streams will remain index-linked for the
lifetime of the project.
Many of the targeted assets are owned by companies engaged in
other businesses that want to sell their non-core assets in
solar.
"The response that we've had from the owners of the assets has
been extremely positive, bearing in mind that most of these are
owners of assets that are not core to their main business, which is
frequently construction, and some are in a degree of financial
distress, Roberts told Dow Jones Newswires in a telephone
interview. "We are offering to buy them for cash and that's very
attractive to them."
But Engyco is likely to face competition from Spanish companies
that are also trying to buy troubled smaller solar developers.
Among them are Spain's biggest photovoltaic solar operator,
T-Solar, and Fotowatio, in which General Electric Co. (GE) holds a
31.85% stake. T-Solar, which has 143 megawatts of photovoltaic
electricity generating capacity in operation, also plans an initial
public offering to finance its international expansion.
Engyco also announced a series of appointments to its board,
including Thomas Krupke to the post of chief executive officer.
Krupke was previously chief executive at Germany's solar module and
photovoltaic manufacturer Solon SE (SOO1.XE). Pedro Mielgo,
formerly chairman of Spain's national grid company Red Electrica de
Espana, a subsidiary of Red Electrica Corp. SA (REE.MC), will be a
non-executive director at Engyco.
Ambrian Capital PLC (AMBR.LN) CEO Tom Gaffney told Dow Jones
Newswires initial interest from potential investors has been
encouraging.
Engyco has appointed Numis Securities Limited and Ambrian
Partners as advisers.
Company Web site: http://www.engyco.com
-By Selina Williams, Dow Jones Newswires +44 207 842 9262;
selina.williams@dowjones.com
(Jason Douglas in London and Juan Montes and Bernd Radowitz in
Madrid contributed to this story.)
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