China Three Gorges agrees to buy Alcazar Energy

The Chinese company will gain a strong presence in the Mena region with the acquisition of seven wind and solar projects

Al Dhafra Solar Plant. WAM

A consortium of companies led by China Three Gorges South Asia Investment has bought Alcazar Energy, a renewable energy developer that operates across the Middle East and North Africa and is backed by Mubadala Investment Company.

The acquisition of Alcazar Energy's portfolio of seven wind and solar projects across Jordan and Egypt with a total generation capacity of 411 megawatts will give CSAIL and the other Chinese investors, access to the Mena region and help expand their presence.

The terms of the deal were not disclosed. Alcazar had invested $750 million in its projects.

Alcazar Energy's investors include BluStone Management and Dash Ventures, the World Bank's International Finance Corporation, the IFC’s Catalyst Funds, Mubadala Infrastructure Partners and Alcazar's own management team.

"We are proud of what we have achieved ... with the support of our investors, lenders and local governments over the past six years," Daniel Calderon, co-founder and chief executive of Alcazar Energy, said in a statement.

"Our plants have helped develop the renewable energy industry in Jordan and Egypt, powering 275,000 households and saving over 15.6 million tonnes of carbon dioxide, while also making a strong contribution to economic growth and employment, particularly within the local communities."

Countries across the Mena region are investing heavily in renewable energy to diversify their energy mix, reduce costs and their reliance on hydrocarbons, and also meet their climate commitments.

The UAE, Saudi Arabia, Jordan, Egypt, Morocco and Oman have developed various solar projects and are home to some of the world's biggest initiatives. Abu Dhabi is home to the world's largest solar power plant in Al Dhafra region.

Alcazar estimates that 157 gigawatts of renewable energy capacity will be added to the sector and $175 billion will be invested in the next ten years.

Wider use of solar power can help generate electricity and help countries that suffer from shortages and power cuts.

China Three Gorges South Asia Investment is an investment holding company that was formed by the China Three Gorges Corporation and the China Three Gorges International Corporation in 2011 to acquire, develop, build, own and operate renewable power generation projects, primarily in Asia. Other shareholders in the company include the IFC and the Silk Road Fund.

China Three Gorges and its fellow investors provided a comprehensive strategy, which culminated in the agreement, Mr Calderon said

China Three Gorges provided details on "how they wanted to continue to work with our various employees in Jordan and Egypt and how they want to continue to grow the portfolio as they have done in multiple other regions and we felt, partially because of that, they would be a terrific shareholder for the region", Mr Calderon told The National.

"They are themselves one of the largest investors in renewable energy in the world. So it is natural that, right now they own one of the largest portfolios of renewable energy in the Middle East."

Mr Calderon said the immediate focus now will be to help the new owners "integrate their portfolio in the best way possible".

All employees in Jordan and Egypt will be retained. Alcazar's management team, including Mr Calderon, will stay on for an agreed period of time to help with the integration of the business, he said.

"There is a tremendous need for investment and that provides a great opportunity for infrastructure investors to come to the region," he said.

Natixis and its affiliates Vermilion Partners and EFG Hermes acted as financial advisers to China Three Gorges South Asia Investment. Allen & Overy provided legal counsel.

Standard Chartered acted as exclusive financial adviser to Alcazar Energy Partners. Freshfields Bruckhaus Deringer LLP and Bracewell provided legal counsel.

Updated: August 23rd 2021, 8:37 AM
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