LONDON: Georgia Capital PLC has acquired 100% equity stake in Hydrolea LTD through its wholly-owned subsidiary.
Hydrolea operates three Hydro Power Plants (HPP) with an aggregate 21MW installed capacity, and has a greenfield HPP project with a 19MW targeted installed capacity.
All Hydrolea HPPs have high capacity factors – averaging 54% – making the investment per annual GWh generation an attractive alternative to a construction option.
All three operational HPPs are expected to add approximately US$ 4.1 million to US$ 4.4 million EBITDA in aggregate to the Renewable Energy Business’s income statement in 2020 on the back of c. 105 GWh net annual generation.
Following the acquisition, the Renewable Energy Business will have 71MW installed capacity and a pipeline of 350MW in the medium term.
The pipeline project, 19MW run-of-river type HPP, is expected to be commissioned by the end of 2022. The project is currently at the development stage with expected net annual generation of c. 88.8 GWh and an expected EBITDA of approximately US$ 3.8 million at commencement.
The construction works are expected to commence in 2020, subject to the finalization of the construction permit. Total project cost is estimated at US$ 27 million, of which US$ 8 million will be capital allocation by Georgia Capital.
Irakli Gilauri, Georgia Capital Chairman and CEO commented: “I am pleased to announce that our Renewable Energy Business has secured these high-quality assets with existing strong dollar-linked cash flows and high growth prospects. Georgia has gradually become a net electricity importer over the last two years, with growing internal electricity demand pointing to a record high 1.4TWh deficit by 2019, which is expected to grow significantly in the coming years. With this acquisition, our Renewable Energy Business continues to progress towards achieving its medium-term goal to become a dominant player in the fast-growing Georgian electricity market, which has benefited from recent market deregulation.”
Hydrolea has two selling shareholders: Crosscountry Georgia LLC and Ioseb Natroshvili. The transaction values Hydrolea’s enterprise value at US$38.5 million, which includes three operational HPPs with an aggregate 21MW installed capacity and the greenfield 19MW HPP project.
The Group will provide up to US$ 10 million equity capital for the acquisition and up to US$ 13.3 million short-term bridge facility to fund the transaction. The bridge loan will be refinanced by the Company by the end of 2019.