US fund Global Infrastructure Partners (GIP) has agreed to buy Equis Energy, Asia's largest independent renewable energy firm, for US$3.7 billion (S$5 billion) with partners including China Investment Corp, underscoring growing global interest in renewables investment.
Singapore-headquartered Equis is the largest renewable energy independent power producer in the Asia-Pacific, with over 180 assets comprising solar, wind and hydro generation spread across countries including Australia, Japan, India and the Philippines.
Equis' assets have installed capacity of more than 11 gigawatts.
"The transaction is the largest renewable energy generation acquisition in history and positions GIP as a dominant renewable energy developer in the key OECD growth markets of Australia and Japan, as well as across India and South-East Asia," Equis and GIP said in a statement yesterday.
Moody's Investors Service said in September that renewables will become a central focus of national energy policies as more countries shift to renewable procurement through competitive auctions.
Reuters reported in July that Japanese trading firms and global pension funds were among those competing for Equis, at a time when many Asian governments are expanding the use of renewable power and its costs are falling.
"Government policies are supportive and encouraging of renewables. But just as important and if not more so, is that the cost curve of both wind and solar has come down massively," one person familiar with the Equis deal said yesterday.
"In most markets now, you don't need government subsidies to make it economically viable and that's always been the handbrake."
The Public Sector Pension Investment Board, one of Canada's largest pension investment managers, is also part of the buying consortium, the statement showed.
"We are excited by the new investment in Equis Energy which is a strong fit with GIP's global renewable investment strategy," said GIP's chairman and managing partner Adebayo Ogunlesi.
New York-based GIP, which manages more than US$40 billion, has investments in Spain's Gas Natural, Port of Melbourne and Britain's Gatwick Airport. It raised a record US$15.8 billion in its third fund that closed in January.
During the Equis sale process, many bidders had formed consortia to divide up the portfolio as some only wanted certain assets, and the acquisition size was large.
The buyers are also taking on assumed liabilities of US$1.3 billion.
Equis and GIP said they signed a binding deal for the sale of 100 per cent of Equis Energy to GIP and co-investors. The transaction is expected to close in the first quarter of next year.