GIC to invest $1.4b in European renewable energy firm EDPR

The investment means GIC would effectively be taking a stake of around 5 per cent in EDPR. PHOTO: REUTERS

SINGAPORE - Singapore sovereign wealth fund GIC has committed to investing €1 billion (S$1.4 billion) for a stake in one of the world’s largest renewable energy producers, EDP Renovaveis (EDPR).

The investment will make GIC the second-largest shareholder of EDPR, after parent EDP, Portugal’s largest utility company.

EDP chief executive Miguel Stilwell de Andrade told The Straits Times on Thursday that the investment means GIC would effectively be taking a stake of around 5 per cent in EDPR, which would help the group accelerate the growth in renewables and the energy transition.

Mr Stilwell de Andrade added that EDPR, the world’s fourth-largest renewable energy producer, was valued at around €19.5 billion.

He said EDP had a strong commitment to maintaining a share of more than 70 per cent in EDPR and had no intention of doing any additional share placements of this size.

Mr Stilwell de Andrade had earlier said that GIC had committed to subscribe to the issue at between €19.25 and €20.50 per share.

“Having an additional capital increase of a billion euros, subscribed entirely by GIC, allows us essentially to accelerate that growth even more,” he said during a press briefing following the company’s Capital Markets Day on Thursday.

“With the investment by GIC, we would go closer to 70 per cent, we’ll still be above it, and we don’t have any intention of additional placements, certainly not of this magnitude,” he added.

Mr Ang Eng Seng, GIC chief investment officer for infrastructure, told ST that EDPR makes an excellent partner because of its global presence, strong project development capabilities and diversification across renewable technologies.

“We are very pleased with this anchor investment to fund EDPR’s considerable growth plan in renewables globally. This aligns with GIC’s commitment to enable the global transition to a net-zero economy, given the key role played by renewables,” said Mr Ang.

EDP will invest around €25 billion over four years to nearly double its renewable energy capacity to 33 gigawatts (GW) by 2026.

The bulk of this investment of around €21 billion will be directed to its wind and solar unit EDPR, while the remaining €4 billion will be channelled towards developing electricity grids.

EDPR’s Asia-Pacific chief executive Pedro Vasconcelos said that the company is committed to investing more than $2 billion to expand capacity in the Asia-Pacific region, with a plan to install an additional 1.5GW of renewable energy by 2026.

“This will be done through directly supporting business behind the meter and larger utility scale projects in front of the meter that greenify the grid,” he said.

“Our priorities are Singapore and China for solar distributed generation, solar and wind utility scale projects in Japan, South Korea and potentially Australia, as these are markets with the greatest regulatory visibility and depth of opportunities.”

He added that the company was also looking to develop new growth avenues such as hydrogen as a final step to fully decarbonise the grid, but he acknowledged that technology was still a way to go to achieve bankability. 

EDP has already started producing green hydrogen via a pilot project in Brazil.

Mr Henning Gloystein, director of energy, climate and resources at Eurasia Group, said: “Portugal, with strong contributions by EDPR, is a leading developer of wind power and green hydrogen. EDPR has a growing portfolio globally, especially in emerging markets including South America and Africa. That means it looks well positioned to gain from trends in Europe and big emerging markets.”

Mr Gloystein added that the Russia-Ukraine war, which has entered its second year, has raised the urgency across Europe and in emerging markets to reduce their exposure to costly fossil fuels.

“There is now strong political and economic signals to invest in green energy solutions, and if this is further backstopped by subsidies and government guarantees, as is the case in the European Union and Portugal, then that only makes green energy investments an attractive proposition,” he said.

In 2022, EDPR acquired a 91 per cent stake in home-grown renewable energy firm Sunseap, in a deal that was valued at around $1.1 billion.

Sunseap, founded by Mr Frank Phuan and Mr Lawrence Wu, is credited for being among the first to install solar energy systems in public residential estates, commercial and industrial buildings in Singapore.

In March 2021, the company completed one of the world’s largest floating solar farms in the Johor Strait in the north-western part of Singapore, near the border with Malaysia. It is also building a mega floating solar farm in Batam, Indonesia, at a cost of about $2 billion.

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