CGN fund sets renewables sale timeline

09 April 2019 - 12:00 am UTC

CGN Capital Partners Fund III, planning to sell and refinance its renewables portfolio this year, is looking to take bids in August, according to a senior official.

The RMB 3.69bn (USD 556.3m)-China renewable fund, which mandated Cantor Fitzgerald as its global financial advisor late last year, plans to distribute teasers in May, Raymond Fung told Inframation in an interview. The final round of bids is likely to happen by the end of 2019, he added. Information Memorandums for the sale are likely to be issued to a limited number of potential buyers.

Some institutional and strategic investors from Canada, China and France – including China Three Gorges and the fund’s state-owned parent China General Nuclear – have already shown interest when sounded out by the fund’s advisor, Fung said.

“We expect a fairly competitive process,” he said, adding that he expects Chinese policies on renewable energy to be more favorable from next year.

The fund has been talking with global banks since last year about the financing package, with an intention to make the portfolio “as easy and clean as possible” for investors. The refinancing plan has attracted Chinese insurers that are looking into potential private placement of bonds. 

Bond issuance out of Hong Kong or Singapore could be a potential refinancing approach, Fung said, noting that project bond options, though not very common in Asia, have advantages such as lower cost of capital and better tenors.

The CGN Fund III is overseen by CGN Private Equity Fund Management and JIDA Capital Partners, owned by the management team and HRL Morrison. The fund, which reached final close in June 2017, counts an extensive portfolio of onshore wind, solar and other renewable assets in China.

Overall, the fund is selling about 1GW of wind and solar assets in China. Also, 165MW of 240MW of CGN Fund III’s solar projects are in the seventh batch of projects eligible for national renewable subsidies.

About 500MW of Fund III’s wind farms are scheduled to be operational by the end of June. In total, about 650MW-700MW of wind assets will commence operation at the end of 2019.

CGN Fund III’s LPs are Agricultural Bank of China, CGN, China Cinda Asset Management, China Huarong Asset Management, China Pacific Insurance, China Three Gorges, ICBC, PICC, Postal Savings Bank of China and Utilico Emerging Markets.

For its fourth fund, Fung expects to see more LPs from outside China. It has already received interest about its planned Fund IV from several global LPs looking to invest, he said.

 

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