18th Jan 2010 07:00
18 January 2010
Greenko Group PLC ("Greenko" or "the Group")
Potential acquisition of 20 MW of Operating Hydro Assets and Licenses for the development of 100 MW of Hydro projects (the "Transactions")
Greenko, the Indian clean energy owner and operator, is pleased to announce it has secured the opportunity to significantly enlarge its operating capacity and concessions under development by signing a number of Memorandums of Understanding. The Transactions will increase the secured capacity of the Group from 350 MW to 470 MW.
The Directors believe the group is well positioned with a strong pipeline in an advanced stage. The management continue to find opportunities for acquisition and expect to make further announcements in due course. The recent capacity additions are in line with the Group`s target of 1000 MW installed capacity by 2015.
Operating assets - 20.25 MW run-of-river hydro assets
The operating assets comprise two 5 MW plants in Himachal Pradesh in the Chamba and Kangra districts respectively and a 10.25 MW plant on the Arkavati River in the state of Karnataka.
The Himachal Pradesh projects have high load factors with over 60% achieved due to the snow fed rivers in Himachal Pradesh. The scheme in Karnataka is a rain-fed river with a load factor of up to 40%. All the schemes have long term contracts with State utilities and two of the three projects are certified for CDM or carbon credits. All three meet the Group`s benchmark Equity returns.
The Transactions will have a total cost of €24 million which Greenko expects to finance through borrowings of approximately 70% of the value and the equity recently raised from the Global Environmental Fund subscription which closed on 25 November 2009. The Group has arranged debt leverage with a local banking partner, Yes Bank, and the acquisition is due to complete legal documentation in two to three weeks.
The projects have a well documented history of favourable operating characteristics (taking into account the unusual monsoon in 2009) with a mix of rainfall and snow fed based hydrology, which the Directors believe will provide long term sustainable cash flows and returns.
Licenses - 100 MW of run-of-river hydro projects
Greenko has acquired licenses to develop a cluster of 25 MW run-of-river hydro projects totalling 100MW on the Cauveri River in Karnataka which is a perennial river with very good hydrology. These are cascading projects and will raise Greenko`s secured capacity in Karnataka to over 100 MW. The Directors anticipate that the projects will be completed in the next three years in readiness for 2013 following a total capital expenditure of €90 million. Again it is planned that these projects will be 70% funded through debt.
The projects should benefit from high plant load factors due to their location on the river Cauveri which has an estimated basin size of 27,700 square miles and is considered to be one the largest river systems within India as a whole. The projects` planned locations benefit from easy access to mobilise resources and evacuate power thereby reducing the implementation period by over 12 months. The projects are also close to demand centres like the city of Bangalore and well positioned for marketing power direct to the end user, using the merchant model, enabling above average returns.
Anil Chalamalasetty, CEO of Greenko, commenting on the announcement, said:
'These Transactions to acquire 120 MW of hydro projects are another key step towards our previously stated aim of developing and owning over 1000 MW of clean energy assets. The assets have a proven operating history and the new licenses are in a region with very good hydrological characteristics with the potential to have relatively short implementation times and provide attractive long term sustainable returns.'
Enquiries:
Greenko Group plc
Anil Chalamalasetty +91 (0)98 4964 3333
Mahesh Kolli +91 (0)99 4958 6332
Arden Partners plc
Chris Hardie +44 (0)20 7614 5900
Adrian Trimmings
Cardew Group
Rupert Pittman +44 (0)20 7930 0777
Jamie Milton
Catherine Maitland
NOTES TO EDITORS
Background
Greenko intends to become a leading owner and operator of clean energy projects in India. Greenko currently has 101 MW of capacity of clean energy assets including six biomass and three hydro plants and 250 MW of concessions under development. The Company is focused on developing a portfolio of biomass, hydro electric and wind assets within India and intends to increase the installed capacity it operates through a combination of purchasing projects as well as the winning of concessions to develop new greenfield assets.
Related Shares:
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