Monday 23 September 2019

Gaelectric hires KPMG to weigh asset sales

Brendan McGrath, Gaelectric.
Brendan McGrath, Gaelectric.

Gretchen Friemann

Indicative bids are due within the next few months for assets belonging to energy firm Gaelectric as the company attempts to capture value for shareholders rather than risk further strains to its balance sheet.

More than a dozen investors are thought to be swarming over the assets of the green energy developer, after the European arm of China General Nuclear Power Group (CGNEE) backed away from a potential deal last month amid concerns at changing Government policy in the sector and persistent planning challenges.

CGNEE snapped up close to €400m-worth of wind farms from Gaelectric in 2016 and then spent up to nine months weighing whether to take a half stake in the company.

The Chinese heavyweight abandoned those negotiations last month, principally, one source said, out of concern at the Government's downbeat renewable energy targets, outlined in an economic paper last month.

"CGNEE remains our biggest client for asset management and power marketing services," said a Gaelectric spokesman.

The Gaelectric board has drafted in KPMG to run a sale, with the company's assets likely to be sold off piecemeal, according to sources. It is understood the recently-floated Greencoat Renewables is among the contenders for Gaelectric assets.

Greencoat is essentially a listed infrastructure investment vehicle, attractive to its investors because of its high yield. It has pledged to expand its Irish portfolio before targeting solar assets on the continent.

Brookfield Renewable Ireland, an offshoot of Canada's Brookfield Asset Management, is also being viewed as a logical contender.

While Gaelectric may be attractive to a renewable energy player seeking to build out or launch a platform in Ireland, sources have said the most likely scenario is a break-up of the company.

Gaelectric's debt soared to €317.2m at the end of last March from €172m a year earlier, according to its last set of accounts. Its losses widened to €24.8m. Revenue, mostly from the sale of electricity, more than doubled to €31.5m.

Irish Independent

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