Mainstream secures $620m Chile financing ahead of group sale

Green energy entrepreneur Eddie O'Connor's Mainstream Renewable Power has lined up $620 million (€517 million) of bank funding for a key project in Chile, underpinning the group's value ahead of an expected sale in the coming months.

A group of five banks, including Latin America-focused development lender IDB Invest and a unit of Germany's KfW, have provided the debt finance to develop 630 megawatts of wind and solar farms, enough to power more than 780,000 Chilean homes.

It is the second phase of a three-stage, $1.8 billion renewable energy development contract that Mainstream secured in the country in 2016. Financing of the first phase of the so-called Andes Renovables project closed last November and is more than 30 per cent complete.

"Reaching financial close on the second phase of our Andes Renovables platform is a further positive step on Mainstream's journey to delivering Latin America's number one wind and solar PV (photovoltaic) power generation platform," said chief executive Mary Quaney.

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“Despite the uncertain economic environment caused by Covid-19, today’s announcement is testament to the support of the banking consortium of Mainstream as the world’s leading independent developer of renewable energy.”

Ms Quaney took charge of the group a week ago, after the surprise departure of Andy Kinsella, who had led Mainstream since late 2017. Sources said the exit would not impact the group's strategy and "equity partner" search, which will most likely result in a takeover of the entire group. The business may be worth as much as €1 billion, according to some estimates.

A spokesman for the company said the “equity process is on track to conclude in the second half of 2020”. Mainstream has attracted bid interest from a number of European utility groups as well as sovereign wealth, private equity and infrastructure funds.

Major shareholders

Mr Kinsella, who was the first person Mr O'Connor hired when he set up Mainstream in 2008 after the sale of his first green energy business, Airtricity, remains a shareholder in Mainstream.

Mr O’Connor owns 55 per cent of the business and is its chairman. Management and a group of high-net-worth individuals, most of whom first invested in 2008, hold the remainder.

Mainstream has 1,900 megawatts of projects in construction or on the cusp of being built across Chile, Egypt, Senegal and South Africa – the equivalent of about a quarter of peak demand for electricity in the Irish market.

It has an additional development pipeline of almost 10,000 megawatts of projects at various stages in countries including Vietnam, the Philippines, Australia and Colombia.

Mainstream swung into a €487.5 million profit in 2018 from a €5 million loss for 2017, driven by the sale of a Scottish offshore wind farm for up to €650 million to French utilities giant EDF. Results for 2019 are expected to be filed within weeks.

The deal allowed the company to repay all its corporate debt – as opposed to project borrowings – and buy back shares and warrants held in the business by British bank Barclays, Japanese trading house Marubeni and Australian financial group Macquarie.