MANAMA: Bahrain-based Arcapita Bank has taken its first step into the Chinese market in a $2 billion joint venture to develop wind farms.
It has formed a partnership with Colossus Holdings, a Singapore-based holding company of the Tanti group, a multi-billion Indian conglomerate, which will invest $2bn to develop a 1,650 megawatt (MW) portfolio of wind farms in the inner Mongolia region of China.
The joint venture partners have signed a definitive purchase agreement to acquire Honiton Energy Holdings, a high growth Chinese wind energy generation company, which will build the portfolio.
Honiton was established in 2005 to develop and operate wind power generation facilities within China, and to date, has 50mw of installed capacity, and a further 100mw in development.
In addition, the company has worked closely with the regional and state authorities in China, and has secured agreements to develop wind farms on five separate areas in China, representing a total of 2,244 sq/km, on which it plans to develop its total capacity to reach 1,650mw by 2012.
Total installed wind energy capacity in China at the end of last year was 6,000mw.
“We have previously built expertise in this sector, which we are very pleased to be extending through this partnership with the Tanti group,” said Arcapita chief executive officer Atif A Abdulmalik.
“We believe this is another high quality investment opportunity in Asia, where we have now done seven transactions, six of which have been completed within the last 12 months. The total transaction value of our Asian portfolio is more than $5bn.”
Arcapita sourced and executed the transaction out of its Singapore offices.
“There is universal agreement that China’s demand for energy will continue rising strongly from its current levels of 2,500 terrawatt hours annually,” said Arcapita head of asset-based business Asim Zafar.
“With increasing energy demand, rising fossil fuel prices and growing need for clean and renewable energy, wind energy has developed further than the existing alternatives in its potential for scale and efficiency.
“Honiton has an excellent asset base, as well as a management team with good relationships in China at a regional and state level, which already has a track record of achievement.”
As well as being Arcapita’s first investment in China, it is also Arcapita’s first asset-based investment in Asia.
Arcapita previously developed and then successfully sold a 391mw portfolio of wind farms located in the UK. [email protected]