French renewable energy producer Neoen is considering an IPO or a stake sale to fund a doubling of its installed capacity to two gigawatts by 2020, its chief executive said.
Neoen is one of several upstart French renewable energy companies that has become big enough to have good access to financing, offering investors a chance to bet on the disruption of former monopolist EDF’s (EDF.PA) centralized business model.
In December, it stole a march on EDF by opening a 300 megawatt (MW) solar farm – Europe’s biggest – near Bordeaux, which will sell power more cheaply than the new nuclear reactors EDF plans to build in Hinkley Point, Britain.
Neoen Chief Executive Xavier Barbaro, 40, told Reuters the firm is installing about 300 megawatts of solar and the wind per year and is on track to have a capacity of 1 gigawatt (1,000 MW) by mid-2017.
Barbaro said Neoen will continue at this pace in coming years and expects to double capacity to 2 GW by 2020. To fund this, it is considering a 200-300 million euro ($225-$562 mln) capital increase.
“We will consider an IPO in the future, before the end of the decade. … It is either an IPO or a new minority shareholder, it could be both,” he said in an interview.
Jacques Veyrat, former chief executive of commodities giant Louis Dreyfus who owns 56 percent of Neoen through his investment vehicle Impala, wants to remain the largest shareholder, Barbaro said.
Infrastructure fund Omnes Capital owns 24 percent and French state fund Bpifrance owns 14 percent. Six percent is set aside for staff and management.
Depending on business conditions in coming years, the IPO or stake sale could value Neoen at over 1 billion euros following the capital increase, Barbaro said.
By the end of this year, Neoen will have 1 GW – the equivalent of a nuclear reactor – installed or under construction, of which 600 MW in France, 300 MW in Australia, 100 MW in El Salvador. Its assets are 65 percent in solar, the rest mainly in wind.
Neoen wants to keep about 80 percent of its investments in OECD countries but has projects in several emerging markets.
It won a 50 MW solar contract in Zambia in a tender organized by the World Bank’s International Finance Corporation, where Italy’s Enel (ENEI.MI) – one of its biggest competitors along with French Engie (ENGIE.PA) – won the other contract.
Barbaro said the IFC helped organize the tender, validated the power purchase agreements and provided debt financing. Neoen says it will sell power at $61 per megawatt hour, compared to the average $200 paid in Zambia for power generated with diesel or imported.
In Jamaica, where Neoen lost the first tender in 2012, it won a tender for a 49 MW solar project near Savanna-la-Mar. There too its solar panels are highly competitive compared to diesel.
Neoen also seeks contracts with companies. In Jordan, it won a tender for 37 MW of solar to sell power to telecoms group Orange (ORAN.PA) and in Australia, it built a 10 MW off-grid solar plus battery storage facility for copper miner Sandfire Resources (SFR.AX) on an isolated site hundreds of kilometers from the nearest grid.
Barbaro said that despite Neoen’s recent acquisitions of renewables companies Poweo EnR and Juwi France, it is not counting on acquisitions to reach its 2 GW target.
“We don’t rely on M&A, organic growth is the plan,” he said.
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Source: Reuters.com