independent

Friday 18 April 2014

Bord Gais wind farms rebuff for Mainstream

Approach by O'Connor rejected as €1.13bn deal with Centrica agreed

Eddie O'Connor
Eddie O'Connor

EDDIE O'Connor's Mainstream Renewable Power was rebuffed when it made an approach to buy the wind-farm business of Bord Gais Energy earlier this year.

Last week, a deal to sell Bord Gais Energy to Centrica for €1.13bn was agreed by the Government, following a tortuous sales process that threatened to derail on several occasions as valuations flip-flopped.

Centrica, a major UK operator, had teamed up with iCON Infrastructure and Brookfield Renewable Power in the bid. Brookfield is set to take control of the Bord Gais wind-farm assets that had been eyed by O'Connor's fast-growing firm.

However, the BGE wind-farm snub is only a mild bump in the trajectory of O'Connor's firm, which is set to become the world's largest independent renewable energy company, as it unveils plans to raise $3bn in debt to fund a massive 1950 MW wind-farm development plan.

O'Connor set up Mainstream Renewable Power in 2008, after selling Airtricity to SSE for over €1.4bn. He has raised close to €385m from investors, including Barclays Bank. Recently he sold a 25 per cent stake in Mainstream to Japanese trading house Marubeni for €100m. The deal saw O'Connor's stake diluted to 35 per cent.

Mainstream is working with advisers Investec on a scheme to provide liquidity for its investors by creating a "grey market" for the shares.

O'Connor told the Sunday Independent that he expects the scheme to be up and running in the next year. Some investors are sitting on a 50 per cent return on their stake in the green energy group. Shares in the company are currently worth about €4.50, according to O'Connor.

Plans to float the company in 2015 -- potentially on Asian markets -- remain fluid. "We'll have a look see," said O'Connor.

Last week, Mainstream Renewable set up a specialist finance unit, Mainstream Capital, which is to help it with its financing needs. O'Connor is trying to reduce the company's cost of capital and is close to a deal to reschedule over €80m of debt put together by Dolmen, Macquarie and high net worth individuals. The company has already tapped Chinese Bank CDB to provide over $52m in debt to fund its Chilean wind-farm projects in Negrete.

O'Connor is also proposing an innovative scheme to introduce "crowd funding" to wind-farm schemes here. He told the Sunday Independent that he had written to Taoiseach Enda Kenny, Finance Minister Michael Noonan and Energy Minister Pat Rabbitte in the last month. He is set to meet Rabbitte to outline the scheme further shortly.

The crowd funding scheme would enable local investors to own stakes in nearby wind farms. It is modelled on existing schemes on the continent, in which people may subscribe for as much as 20 per cent of certain renewable projects.

Mainstream Renewable Power is working on a multi-billion euro plan to develop wind farms in the midlands, which could export excess green energy to the UK grid. Some 600 landowners in the midlands have already held discussions with the group.

Irish Independent

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