Mainstream Renewable Power, the wind and solar energy group founded by Eddie O'Connor which focuses on emerging markets, has lured bid interest from a number of overseas utility groups and sovereign wealth funds ahead of a deadline next week for indicative offers for the business.
It is understood that private equity and infrastructure funds are also running the rule over Mainstream, which is seeking non-binding bids by June 26th. However, industry sources said that the deadline may drift into early July. Final offers are expected by the end of the month.
The company may be worth as much as €1 billion, according to some estimates.
The 12-year-old company hired investment bank Rothschild last December to find an equity partner to help finance the development of its pipeline of projects. Sources said at the time that the move was likely to flush out takeover bids.
It is understood that most of the parties that have been carrying out due diligence on the company in a virtual data room since last month are interested in acquiring control of the business, led by chief executive Andy Kinsella.
Development pipeline
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 currently has 1,900 megawatts (mw) 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 has a fully funded three-year business plan and the company is now seeking a significant equity partner to enable it to accelerate and expand its existing build-out programme and deliver a multi-gigawatt scale global platform of generation assets over the coming decade,” said a spokesman.
“This process is targeting investors interested in a shareholding in Mainstream which may result in a controlling position of the business.”
Scottish wind farm
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.
The deal allowed the company to repay all its debt and buy back shares and warrants held in the business by British bank Barclays, Japanese trading house Marubeni and Australian financial group Macquarie.
The company also opened a temporary grey market for trading of its shares in late 2018 at €9 a piece, representing a 300 per cent return on the original cost of the shares in 2008. About 10 per cent of the stock traded at the time.
The grey-market price was set at a discount to a €11.70-a-share independent valuation that was put on the shares ahead of the exercise. That valued the group at about €700 million.
The completion late last year of a debt-financing deal for the first stage of the group’s 1,300mw Chilean wind and solar projects is said to have boosted the value further. The expected close in the coming months of a financing of the second stage of the massive project will also play into how potential bidders value the group.
