CDC Globeleq invests in Asian power assets
24 March 2003
CDC GLOBELEQ INVESTS IN ASIAN POWER ASSETS
Following its acquisition of two power generating projects in Africa, CDC Globeleq, the emerging markets power company of CDC Group plc, has agreed to invest US$127 million in cash to purchase two state-of-the-art Bangladeshi energy assets from AES Corporation. The transaction is valued at US$437 million, including equity and assumed debt.
The deal is for two combined cycle gas turbine plants located close to Dhaka, the Bangladesh capital. Haripur, a 360-megawatt plant, started generating power in 2001 and Meghnaghat, a 450-megawatt plant, became operational at the end of 2002.
Backed by the World Bank, Asian Development Bank and Government of Bangladesh, these projects together represent 25 per cent of the country’s generating capacity and have improved the reliability of supply for the 129 million citizens of Bangladesh, who suffer from severe power shortages. The power provided by the plants is the most affordable in the world.1
According to the Bangladeshi Ministry of Energy and Natural Resources, the country will need to double the generation of electricity in the next seven years to meet rising demand. However, 30 to 40 per cent of current generating capacity needs to be replaced. The limited role being assumed by traditional power companies in emerging markets means that CDC Globeleq’s investments are increasingly important to enable developing countries to transform their infrastructure to meet humanitarian and economic needs.
This investment follows CDC Globeleq’s acquisition, in December, of power generation plants in Tanzania and South Africa from AES. The move is the latest stage in the company’s plan to become the leading provider and operator of power in the emerging markets.
Commenting on the acquisitions, Bob Hart, CEO of CDC Globeleq said “I am pleased that the next stage in our strategy to become the world’s leading emerging markets power company is complete. This considerable investment in Bangladesh gives CDC Globeleq a major stake in power in South Asia. The local management team is strong and I welcome the contribution they are making to transform the reliability of supply in Bangladesh. We all look forward to playing a role, in partnership with the Government of Bangladesh, in order to provide reliable electricity for Bangladesh.”
CDC Group Chairman Lord Cairns said: “We have a long track record of investing in Bangladesh. This investment underlines our commitment to the strategic development of the power industry in South Asia. CDC Globeleq is perfectly positioned to take on responsibility for commercially viable power projects from those businesses that cannot sustain their investment in the developing world. This investment in Bangladesh will allow us to bring our technical and commercial expertise to these plants and enable us to develop them in a socially responsible manner whilst producing good returns.”
As part of the deal, CDC Globeleq will take over AES’s commitment to provide more than US$1million funding for the construction of a new hospital, a school and a bridge.
As part of its restructuring announced in August, CDC Globeleq has been established to manage more actively CDC’s existing US$350 million portfolio of power businesses, making further acquisitions in emerging markets and working to mobilise third party capital into essential development projects. Six existing CDC power investments in South Asia, including India, Pakistan, Sri Lanka and the Philippines will offer the potential for regional synergies with Haripur and Meghnaghat.
