October 12 (Renewables Now) - ContourGlobal LP, a company with 2.64 GW of thermal and 1.5 GW of renewable power capacity, gross, aims to raise about USD 400 million (EUR 338m) primary proceeds from an initial public offering (IPO) in London, it said today.
The owner and operator wholesale power generation plants will list a wholly owned subsidiary. It said that existing shareholders in the business, such as Reservoir Capital Partners LP, may also sell shares in the offering, while the Santo Domingo family is mulling a move to boost their stake in ContourGlobal.
Admission of shares on the main market of the London Stock Exchange (LSE) is seen to occur in November.
ContourGlobal plans to use the proceeds from the IPO to further strengthen its balance sheet and ensure further flexibility to fund future growth. The company is focused on long-term contracted wholesale power generation, targeting high margins at lower risks relative to other segments in the power sector.
Full details of the IPO will be available in the prospectus to be published in the coming weeks.
FINANCIAL PERFORMANCE AND DIVIDEND
In 2016 ContourGlobal reported USD 905.2 million of revenues and USD 440.4 million of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA). The Renewable business fetched USD 193.1 million in adjusted EBITDA, and USD 281.8 million came from the Thermal division.
In the first half of 2017, the company booked revenues of USD 462.4 million and adjusted EBITDA of USD 234.5 million.
“A listing on the London market will support the company in the next phase of growth as we seek to double our adjusted EBITDA to more than USD 1 billion within five years,” said CEO Joseph Brandt.
The directors of the company currently expect to pay roughly USD 17.5 million in dividends in the first half of 2018, and of USD 70 million to USD 80 million for the whole next year. ContourGlobal expects to increase the dividend by a minimum high single-digit growth rate per year over the next five years.
ContourGlobal has 69 power plants in 19 countries. Natural gas and methane account for about 31% of its capacity, 29% is coal and 21% is wind. In addition, 14% of the portfolio is hydropower plants (HPPs), 3% is oil and the remaining 2% come from solar power plants.
Europe is the company’s main market with 2,488 MW of capacity, followed by Latin America with 1,424 MW, and Africa with 228 MW. These figures are for the end of June 2017.
ContourGlobal will continue to pursue targeted greenfield developments, acquisitions and strategic acquisitions at attractive spreads to prevailing market rates of return, it said.
(USD 1 = EUR 0.84)