Australia's Babcock Confident Wind IPO Will Fly
Date: 29-Sep-05
Country: AUSTRALIA
Author: Paul Marriott
With the global wind energy industry forecast to grow at close to a fifth each year until 2009, and $78.2 billion of new projects likely over the same period, the investment and advisory firm hopes to raise funds to power further expansion.
The newly-listed Babcock & Brown Wind Partners (BBWP) will initially hold stakes in 15 wind farms across Europe, the United States and Australia, with combined generation capacity of 672 MW, enough to power over half a million homes.
"This is a sector driven by the desire to reduce greenhouse gas emissions and diversify a nation's energy mix with renewable sources, thereby reducing dependence on non-renewable resources," Chief Operating Officer Geoff Dutaillis told Reuters.
"Then we have $250 million reserved for identified new investments in the United States and Europe," he said.
"Beyond that we'll look to tick all the boxes of our investment criteria including quality wind resource, stable regulatory environment and grid capacity to take wind."
BBWP will offer 258 million new securities at A$1.40 each, suggesting a market capitalisation of up to A$692 million if a A$35 million over-subscription option is exercised. The offer will be made to institutional but not retail investors.
CLEAN ENERGY
Dutaillis hopes to capitalise on growing interest in clean energy from global investors, with US and British investors alone pledging $1 billion to the sector at an Institutional Investor Summit on Climate Risk at the United Nations headquarters in May.
Australia's Viridis Clean Energy Trust, an investor in wind and hydro-electricity assets, is trading up 8.5 percent on its early-September issue price, though local fund managers maintain mixed views on the sector, asserting alternative energy suppliers are currently tapping the market because of the high cost of traditional fuel supplies.
"These companies do provide high growth, although we need to look at the businesses in a normalised pricing environment, and not when oil prices are holding firm," said Atul Lele, a portfolio manager with White Funds Management.
"But at this point, we are not looking to invest in alternative energy companies due to our interest rates outlook, as a rising rate environment negatively impacts the utilities."
Some investors though, are attracted to the potential trading of carbon credits to help companies and governments meet emissions targets under the international Kyoto Protocol, with wind energy currently eligible for credits until 2012.
The International Energy Agency says $16 trillion of investment is needed in the next 25 years to calm record oil prices and ensure energy supplies will meet rising global demand, which is being led by fast-growing China.
Babcock said on Monday it would have an initial 15 percent interest in BBWP, which was formerly called Global Wind Partners. Another Babcock-managed investment fund, Babcock & Brown Infrastructure Group, would have an interest of about 17.5 percent at the listing of BBWP.
The BBWP offer opens on Tuesday.
(US$1=A$1.32)
