Ga­elec­tric pre­par­ing to sell off €750m of wind­farms

Irish Independent - Business Week - - BUSINESSWEEK - John Mulligan

IR­ISH en­ergy firm Ga­elec­tric is eye­ing a sale of a stake in, or all of its op­er­a­tional wind­farms, in a deal that could place a €750m en­ter­prise val­u­a­tion on the as­sets, it’s un­der­stood.

The en­ter­prise value in­cludes debt and equity, but even with the debt at­tached to those as­sets stripped out, the as­sets could still have an equity value of be­tween €250m and €350m, the Ir­ish In­de­pen­dent un­der­stands.

Any pro­ceeds would be used to fur­ther de­velop Ga­elec­tric’s other re­new­able en­ergy as­sets and projects, which in­clude en­ergy stor­age, so­lar and bioen­ergy, as well as en­ergy trad­ing.

A sale could in­clude part or all of about 200 megawatts of wind en­ergy out­put, spread over about 23 wind­farms that are owned by the com­pany.

Ga­elec­tric, which was founded in 2004, owns 13 wind­farms in North­ern Ire­land and nine in the Re­pub­lic.

Yes­ter­day, it an­nounced the com­ple­tion of the ac­qui­si­tion of the 46MW Clogh­boola wind­farm in Co Kerry for €60m from En­er­con, us­ing hy­brid pro­ject fi­nanc­ing se­cured through Nord/LB. It com­prises 16 tur­bines, and can gen­er­ate power for al­most 30,000 homes.

That wind­farm is also among the as­sets be­ing pitched to po­ten­tial buy­ers of Ga­elec­tric’s op­er­a­tional es­tate, it’s un­der­stood.

In­dus­try pub­li­ca­tion ‘Sparkspread’ first re­vealed this week that Ga­elec­tric has tasked in­vest­ment bank Roth­schild to ex­am­ine po­ten­tial deals. An ac­tual auc­tion of the as­sets hasn’t yet for­mally be­gun, it noted.

A spokesman for Ga­elec­tric, which is headed by co-founder and chief ex­ec­u­tive Brendan McGrath, de­clined to com­ment.

The Ir­ish In­de­pen­dent un­der­stands that Ga­elec­tric could de­cide to sell all its op­er­a­tional wind­farms, how­ever, and that it could con­tinue as an op­er­a­tor and main­te­nance provider un­der sales terms.

How­ever, the fi­nal make-up of a deal would prob­a­bly de­pend on whether or not a buyer is an in­sti­tu­tional in­vestor or in the trade.

It was re­cently re­ported that US pri­vate equity gi­ant Lon­es­tar now has an 8pc stake in Ga­elec­tric af­ter the Amer­i­can firm ac­quired debts owed by Ga­elec­tric’s co-founder, Ea­monn McGrath, to IBRC.

How­ever, it’s be­lieved that would not pose any ob­sta­cle to a sale of the op­er­a­tional wind­farms.

Ga­elec­tric has a tar­get of hav­ing 400MW of op­er­a­tional wind­farms by 2017 – but that in­cludes the 200MW of so of as­sets it is cur­rently lin­ing up for a sale.

Last year, Ga­elec­tric signed an agree­ment with Ir­ish firm Oriel to de­velop a 15MW off­shore win­darm in the Ir­ish Sea at a cost of €80m.

That’s part of a much big­ger planned pro­ject called the North Ir­ish Sea Ar­ray, which could even­tu­ally ex­tend to be­ing a huge 870MW wind­farm.

Ga­elec­tric is also de­vel­op­ing a ma­jor en­ergy stor­age pro­ject in Larne, North­ern Ire­land.

The scheme in­volves the cre­ation of two vast stor­age cav­erns more than 1.4km be­neath the Antrim coast.

The stor­age pro­ject, which uses com­pressed air, will be able to gen­er­ate up to 330MW of power for up to six hours, and will cre­ate de­mand for 200MW of power dur­ing its com­pres­sion cy­cle.

Ga­elec­tric also has in­ter­ests in the United States. The com­pany is one of the largest own­ers of wind de­vel­op­ment rights in Mon­tana.

It has over 30,000 acres un­der op­tion for lease agree­ments for its pro­posed 235MW Jaw­bone wind pro­ject in the State.

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