Flotation of energy group Mainstream postponed until 2020

Company eyes more than €200 million from Chile projects and Scottish windfarm sale

Mainstream Renewable Power founder Eddie O’Connor. The company’s new time frame for an IPO is five years behind Mr O’Connor’s original objective. Photograph: Frank Miller

Mainstream Renewable Power founder Eddie O’Connor. The company’s new time frame for an IPO is five years behind Mr O’Connor’s original objective. Photograph: Frank Miller

 

The long-awaited flotation of green energy entrepreneur Eddie O’Connor’s Mainstream Renewable Power, which has raised about €200 million in equity in its first nine years, has been long-fingered until 2020, according to the group’s new chief executive.

The new time frame is five years behind Mr O’Connor’s original objective, and two years later than his most recent target, outlined last year.

Speaking in an interview with The Irish Times, Mr Kinsella said the initial public offering (IPO) postponement is largely down to a legal wrangle setting back the planned sale of its a Scottish wind farm development and as management concentrates on building out projects in South America, Africa and Asia-Pacific.

“Realistically, I think an IPO is about three years away,” Mr Kinsella said. “Potential investors should have quite a good picture in three years’ time of our revenue streams from projects, making it a better time to float.”

In the meantime, the company has informed shareholders, including many high-net-worth Irish investors, in an update posted on Wednesday evening that it entered talks earlier this year on selling a $150 million (€125.6 million) stake to an unnamed US-based investor.

Chilean projects

However, management decided to put this on hold, given the group has received money from the closing of a financing deal on two Chilean projects and is in exclusive negotiations to sell a 25 per cent stake in a much larger development in the South American country, comprising 1,000 megawatts (MW) – equivalent to a seventh of Ireland’s peak electricity needs.

Mainstream is poised to receive between €80 million and €90 million in total from the two Chilean deals, according to Mr Kinsella, declining to break them down.

Mr O’Connor set up Mainstream in 2008 after the assets of Airtricity, the wind energy company he founded two decades ago, were sold to Scottish & Southern Energy, now SSE. The group’s board approved a reorganisation on Tuesday, resulting in Mr O’Connor stepping back from day-to-day management to become executive chairman, with Mr Kinsella, formerly chief operating officer, becoming chief executive.

Meanwhile, Mainstream, which reported a €22.1 million loss last year, signalled in the update that it could mid-2018 before the outcome of a drawn-out legal battle affecting a key Scottish 450MW offshore wind farm project concludes. The company plans to sell the development, subject to it receiving the final go ahead, for “significantly higher” than a €100 million agreement it had reached early last year, which was subsequently set aside, Mr Kinsella said.

In July, the Scottish arm of the Royal Society for the Protection of Birds (RSPB) was denied the right to appeal an earlier court decision which paved the way for the development, and a number of similar projects that were originally approved by Scottish ministers in October 2014.

The RSPB is currently seeking leave to appeal the July decision by the inner house of session in Scotland to the UK supreme court.

Projects

Mainstream began an informal process in recent months seeking out interest in the Scottish wind farm. A successful deal and with proceeds from the Chilean projects, which combined may generate well over €200 million, may result in the $150 million parent group stake sale being scrapped entirely, the chief executive said.

Meanwhile, in September last year, Mainstream signed a deal with General Electric to build $1.5 billion (€1.3 billion) of wind power plants in Vietnam.

The Dublin-based company completed a $117.5 million stake sale in its main South African venture in July last year to a group of investors, including the Rockefeller Brothers Fund and International Finance Corporation, a part of the World Bank.

The Mainstream update said that it “is aware that liquidity for certain shareholders is a concern” and that management is “currently exploring ways to establish a grey market for existing shareholders to monetise their investment, whilst also giving the public an opportunity to buy into the company”.