With the launch of the sale process for the $4bn CWP Renewables business in Australia only a week away, the talk in the market is that CDPQ is the clear frontrunner.
The Canadian pension fund – short for Caisse de depot et placement du Quebec – came very close last year to buying Tilt Renewables, which is a similar business.
The question is which other parties will be brave enough to go up against it.
Names being suggested include Engie, Iberdrola, Shell, APA Group and Origin Energy.
While the promotional material for a sale has been out for a number of weeks, it is understood that information memorandums will be sent to interested buyers in about a week’s time.
After missing out previously, CDPQ is thought to be highly motivated when it comes to CWP Renewables and has hired advisory firm ICA Partners to provide help.
CWP has been put on the market by Partners Group through Macquarie Capital. It is chaired by the former Origin Energy boss Grant King and led by Jason Willoughby. It’s one of the largest renewable energy power producers in Australia, and a price of $4bn could be achieved, judging by the $3bn paid for Tilt Renewables last year.
The portfolio currently has assets in operation or late-stage construction generating 1.1 gigawatts of power in NSW and Victoria and a 5GW development pipeline.
They include the Sapphire, Crudine Ridge and Bango wind farms in NSW and Murra Warra in Victoria.
Customers include Sydney Airport, Snowy Hydro, Telstra and Transurban, with 70 per cent of revenues contracted to 2030 and average contract lengths of 13 years.
The CWP sale comes amid a transition away from traditional sources of energy like coal and gas to wind and solar.
Labor’s election win has been good news for deal makers in the space, with the party planning a 17 per cent increase of renewable energy to 25.6GW by 2030.
Labor has to invest $20bn in some of the electricity transmission projects to bring them forward and this will require some renewable energy asset development.
As part of Labor’s Rewiring the Nation policy, the developed assets will be kept in public hands to keep energy prices low.
If Labor’s election win is not good news for anyone from an electricity transmission perspective, it’s Brookfield, with its purchase of Australian electricity and distribution company AusNet Services last year, and the Transgrid part-owner OMERS, which purchased a 20 per cent stake in 2020.
But the upside from their acquisitions is now not as large as they may have expected.
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