Sept. 27 (Bloomberg) — Infigen Energy, the Australian wind power producer formerly known as Babcock & Brown Wind Partners, said it wants to sell its U.S. business for about $2.2 billion to focus on Australian assets.
“We’re selling out of America for the primary reason that we think there is a fantastic opportunity here in Australia,” Managing Director Miles George said in an interview with Australian Broadcasting Corp.’s Inside Business program. Based on the replacement value of the U.S. unit, the “ballpark” sale figure could be $2.2 billion, he said.
Australia, the world’s biggest exporter of coal, must derive 20 percent of its power from renewable energy, such as wind turbines, by 2020, under a law passed by the senate on Aug. 20. The legislation will help spur A$28 billion ($24 billion) of investment and the creation of 23,000 jobs in industries such as wind and solar power, according to the Clean Energy Council.
“Over the longer term, the regulatory environment and the willingness of governments to encourage alternative energies is clearly a tailwind for anyone in the sector,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. Selling the U.S. units would “go a long way to making Infigen’s debt not as much of a burden and I think equity holders will get a better deal, albeit on a smaller asset base.”
Wind Energy
Infigen shares have risen 55 percent this year compared with a 27 percent gain in the benchmark index. The Bloomberg Wind Energy index, comprised of 64 leading wind power stocks in the world, has gained 32 percent since the start of the year.
Infigen has six buy ratings, two hold ratings and two sell ratings according to Bloomberg data. The company has a market value of A$1.1 billion. Pengana’s Schroeders reviewed the company as a possible investment and decided not to buy shares because the rate of return was lower than traditional energy companies.
“We would like to redeploy capital from that U.S. business into the growth of our Australia business,” Infigen’s George said. The legislation means “the opportunity for our business, we believe, is extremely strong.”
Infigen reported an increase in profit in the last financial year with net income of A$189.5 million, compared with A$17.9 million a year ago after it sold assets in Spain and Portugal. It had net debt of A$1.24 billion at June 30.
Infigen has five wind farms in Australia’s Western Australia, South Australia and New South Wales states. It is the nation’s biggest wind energy generator and the company’s second biggest earner in the past financial year according to company regulatory filings.
It also has 12 wind farms in Germany and six wind farms in France that it is also selling. The U.S. unit is the largest independent wind energy business in the country, George said. It has interest in 18 individual wind farms and the unit was its biggest contributor to sales in the last financial year.
It has appointed Marathon Capital and UBS AG to manage the sale of the U.S. assets, it said on Aug. 17.
