Green energy firm Gaelectric for sale as Chinese investors withdraw
China General Nuclear European Energy had been in talks over 50% stake in the Irish firm
Gaelectric wind farm at Roosky, Co Roscommon. Photograph: Keith Arkins
Green energy developer Gaelectric is up for sale after talks with a possible investor ended in recent days.
China General Nuclear European Energy (CGNEE) had been in negotiations to take a possible 50 per cent stake in Gaelectric after buying wind farms worth an estimated €400 million from the Irish company last year.
However, the Chinese state-owned giant told Gaelectric at the beginning of the month that it was no longer willing to continue those talks, citing market risk and planning constraints.
Gaelectric has hired accountants and business consultants KPMG to oversee a sale of the group’s businesses in a bid to realise value for its existing 60 or so shareholders. The company told staff of the plan on Tuesday.
The businesses, for which KPMG is seeking bidders, are two operating wind farms with the capacity to produce 18 mega watts (MW) of electricity, enough energy for about 10,000 homes; a further group of windfarms at various stages of planning that will generate 60 MW of electricity when they are completed; solar power plants at various points of development that will produce 80 MW of electricity; and an asset management business and an electricity trading arm.
Gaelectric has streamlined its management and board as a result. Chief executive Eamonn McGrath, who owns 22 per cent of the group, is stepping aside in favour of Michael O’Sullivan, its head of corporate finance.
The increasing number of big names such as General Electric entering the industry means that smaller operators do not have the balance sheets to compete.
Following a review by KPMG, Gaelectric’s board decided a sale was the best way to realise value for shareholders.
KPMG partner Mike Hayes, who is well known in the renewable electricity industry, is managing the sale.
It is understood that potential buyers for at least some elements of the business have been in touch with him since he began the process earlier this week.
A spokesman for Gaelectric confirmed on Tuesday that it was working with KPMG on a divestment programme “aimed at maximising the surplus for shareholders”.
Given the spread of businesses, it is thought that Gaelectric’s different divisions could be sold to a number of different buyers rather than just one.
The process could take up to a year to complete. All elements of the group are solvent and Gaelectric’s management is keen not to rush any sale in order to get the best deal. It is also hoped that its 74 workers will keep their jobs.
CGNEE backed away from the deal after the Department of Communication, Climate Action and Environment published proposals to support renewable energy that the industry described as “underwhelming”.
The consultation document was meant to outline how the sector would meet the Republic’s commitments agreements to cut greenhouse gas emissions. However, many in the sector argued that it fell short on this front.
It is understood that the Chinese giant expected the Government to signal a greater level of support for the industry in the consultation process and decided to end talks with Gaelectric when this did not materialise.
CGNEE is the European arm of China General Nuclear Power, a Chinese State-owned energy business that operates and builds nuclear power plants.
The group is expanding into areas such as wind and solar. It is worth about €1.3 billion.