To be sure, some
power industry deals are still going forward.
As the coronavirus began spreading in around the world U.K. renewable
energy developer Solarcentury buttoned up the sale of its residential solar
business to Sweden’s SVEA Solar. Shedding the residential arm is expected to
make Solarcentury more appealing
as a takeover target by a larger entity that could provide better access to
capital than Solarcentury has as a private company. The jettisoned residential arm had a coveted
relationships with Ikea, the iconic furniture peddler based in Sweden. Nonetheless, the remaining Solarcentury operations
are focused exclusively on solar project development with a five gigawatt
pipeline under development.
In late April
2020, clean energy infrastructure fund Glennmont Partners, completed
the sale of a 15% minority stake in the Piiparinmäki wind farm in Finland to Kansai Electric
Power Company (KAEPF: OTC or 9503: Tokyo). Once completed the Piiparinmäki wind farm
will have a 211 megawatt capacity and Glennmont claims it will be one of the
largest wind farms in Europe. Kansai
stepping forward appears to be critical in getting the project fully financed
and completed.
The collective
foot may have been lifted from the gas pedal for right now. However, the utility industry is under some
pressure to building renewable portfolios in particular. For example, Electricite de France S.A. (EDF: Paris) has stated publicly
its goal of building a 50-gigawatt renewable power generation portfolio by
2030. EDF will not be able to wait on
the sidelines too long if management intends to achieve that goal. Likewise Germany’s RWE Renewables (RWE: DE), recently merged
with gas and electricity supplier E.ON., aspires to have a carbon-neutral
portfolio by 2040. Of course, that goal
will be met partially by the closure or conversion of conventional fossil-fuel power
plants, RWE will still need to move forward in acquiring renewable energy
projects to meet demand.
For minority
investors with long-term investment horizons, now may be the time to be
positioned in smaller takeover targets. Seven
renewable energy companies are listed below that may not be on the sales block
now, but could be a topic of discussion once larger companies regain confidence
the worst of the pandemic is behind us.
SELECTED RENEWABLE ENERGY COMPANIES
|
||||
Company
|
SYM
|
Operations
|
Revenue
|
EPS
|
AES Tiete Energia
|
AESTY
|
Renewable power
generation, Brazil
|
$ 2.3 B
|
$0.14
|
Azure Power Global
|
AZRE
|
Solar power plants,
India
|
$12.1 B
|
($0.11)
|
Boralex, Inc.
|
BRLXF
|
Renewable power
generation, Canada
|
$574.0 M
|
($0.16)
|
Ellomay Capital, Ltd.
|
ELLO
|
Renewable power
generation, Israel
|
$19.0 M
|
($0.22)
|
Polaris Infrastructure
|
RAMPF
|
Geothermal power, Latin
America
|
$71.3 M
|
$0.89
|
Scatec Solar ASA
|
STECF
|
Independent power
producer, Norway
|
$1.8 B
|
($0.31)
|
SolarWindow Tech.
|
WNDW
|
Power-generating
see-thru windows
|
$69.9 M
|
($0.12)
|
Norway’s Scatec
Solar already struck a deal with another Norwegian power company Equinor, which
recently increased its stake in Scatec to 15.2%. Scatec had 1,057 megawatts of solar projects under
construction at the end of December 2019.
These companies
are also in the hunt themselves. AES
Tiete Energie recently agreed to buy a 1.1 gigawatt greenfield wind project in
Rio Grande do Norte state in Brazil. Its management team is also not likely to
jump at the first offer. AES Tiete
leadership recently rebuffed an offer from Eneva SA (ENEV3: Brazil).
Furthermore, the
group is active in developing new projects.
In November 2019, Boralex refinanced its wind farm operations in France
for $1.7 billion. The deal provided
CN$200 million in construction financing with the potential for an additional
CN$180 million now in 2020.
SELECTED RENEWABLE ENERGY COMPANIES
|
|||||||
SYM
|
Price
|
Volume
000s
|
Market Cap
|
Dbt/Eqty
|
PE
|
Yield
|
|
AESTY
|
$2.35
|
350
|
$ 993.8 M
|
297.53
|
16.32
|
4.27%
|
|
AZRE
|
$14.80
|
28,430
|
$705.0 M
|
307.86
|
Neg
|
nil
|
|
BRLXF
|
$21.35
|
519
|
$2.2 B
|
397.42
|
Neg
|
2.42%
|
|
ELLO
|
$19.02
|
1,740
|
$231.9 M
|
174.98
|
Neg
|
1.22%
|
|
RAMPF
|
$8.77
|
5,195
|
$135.1 M
|
89.06
|
9.85
|
6.86%
|
|
STECF
|
$13.00
|
28
|
$1.9 B
|
416.9
|
Neg
|
0.78%
|
|
WNDW
|
$1.90
|
66,408
|
$100.6 M
|
0.32
|
Neg
|
nil
|
|
On their own most
of these stocks could be considered pricey given negative earnings. Furthermore, all carry significant leverage. Indeed, financing for future development is a
strong motivator to engage in conversation with a larger company or at least
one with better access to capital.
Neither the author of the Small Cap Strategist web
log, Crystal Equity Research nor its affiliates have a beneficial interest in
the companies mentioned herein.
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