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Investec’s Australia Wind Power Sale Sparks Bid Interest


Wind farm developments and other Australian power assets owned by South Africa’s Investec Ltd. have attracted several bidders, despite uncertainty over a carbon tax that’s made renewable energy more competitive with fossil fuels, a person familiar with the matter said.

On the block are five wind projects in South Australia and Western Australia states, a gas-fired power development in South Australia and a solar power project in Western Australia. Buyers expressed interest in part or all of the assets ahead of a deadline last week, and Investec hopes to tie up a deal by the end of the year.

The wind farms would cost a combined 2.3 billion Australian dollars (US$2.2 billion) to build, and together would have a generating capacity of 965 megawatts.

Investec is selling the power assets as part of a broader strategy to raise funds and cut costs in Australia. Already the company has laid off around 50 staff and has begun winding down a private equity business with investments in telecommunications and event services as it turns its focus to core businesses like private banking and property funds.

Still, the sale comes at a difficult time with Australia’s new center-right government planning to introduce legislation to abolish a tax on the country’s biggest polluters as its first move in parliament. The carbon tax made renewable energy like wind power more attractive because it made it generating electricity from fossil fuels like coal more expensive.

Investec has told potential buyers it has “a strong preference for cash up-front”, according to a flyer obtained by The Wall Street Journal.

The Wall Street Journal reported in August that Investec was seeking a buyer for the Hornsdale wind project in South Australia. Planning approval from the South Australian state government is already in place for the wind farm, which would involve the construction of 105 turbines with a capacity of 3 megawatts each at an estimated A$650 million.

Australia was once a global laggard in wind energy, partly because it has a natural abundance of coal to generate cheap electricity. But activity in wind-power sector began to stir in anticipation of legislation introduced in 2009 that set a mandatory target to source 20% of national power needs from renewable sources by 2020. It then gained pace after the former Labor government implemented measures, like the carbon tax, to bring down greenhouse gas emissions.

Foreign investors have been among the biggest buyers of Australian wind-energy assets. In June, Thailand’s Electricity Generating PCL bought the Boco Rock wind farm in New South Wales state from closely held Continental Wind Partners. Also that month, Malaysia’s Malakoff Corp. Bhd. said it would pay A$650 million for a 50% stake in the Macarthur wind farm, operated and co-owned by AGL Energy Ltd.

Investec is also selling the 70-turbine Mount Cone wind farm development, which has capacity of 200 megawatts and will cost around A$500 million to build, and the proposed Nightwell and Cape Riche wind farms that are each of a similar size.

The smallest of the five wind projects for sale–Kalgarin–is expected to have 15 turbines generating up to 50 megawatts and has an estimated development cost of A$130 million.

None of Nightwell, Cape Riche, Mount Cone or Kalgarin has secured development approval.

In addition to the wind projects, Investec’s Chapman solar power plant and its Cherokee gas-fired project are for sale. Cherokee would cost A$1.2 billion to build, with plans for an installed generating capacity of 1,000 megawatts.

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