Wind Energy Holding sees winds of change blowing yet again
IPO on the horizon for renewable energy firm
26 April 2018
Wind Energy Holding (WEH) is preparing for a 2019 IPO, several years after the original public offering was derailed by one of the most publicised corruption scandals to hit Thailand.
The company had been set to list in 2015, before co-CEO Nopporn Suppipat was accused of extorting former business partner Bundit Chotwitthayakul and violating the country’s lese majeste laws.
WEH previously announced that it would list in the first quarter of 2016, then delayed the IPO to 2017, according to DealStreetAsia.
Listing is not financially necessary at the moment, said Nop Narongdej, chairman of the executive committee at KPN Group, WEH’s majority shareholder.
Financing for five upcoming projects is already in place, according to Mr Nop, and the company’s investment plans will not be modified if the company fails.
“Listing may not be necessary, but it would accelerate acquisition plans and improve the company’s public image,” said Aman Lakhaney, chief strategy officer of WEH.
WEH raised close to 34 billion baht from Siam Commercial Bank last year, but the company will need an additional US$2-4 billion in the next decade. Its current debt-to-equity ratio stands at 70%, a level it plans to maintain in the foreseeable future, Mr Nop said.
KPN Group, a conglomerate with interests in education, real estate and energy, acquired Mr Nopporn’s 60% stake at a substantial discount soon after the scandal surfaced. Mr Nop declined to disclose the exact amount, or say whether it was larger than the value of KPN at the time.
The stake in WEH will be KPN’s largest source of revenue after the five projects start operating, according to Mr Nop.
Payment was structured on a milestone basis, which stipulated that KPN would pay once projects were built. “It was set up as a nice private equity deal,” Mr Lakhaney said.
Mr Nop declined to give financial details but said the company already fulfils all criteria of the Stock Exchange of Thailand, which requires listed companies to have a net profit of at least 30 million baht and revenue of at least 2 billion baht in the latest year, as well as a market capitalisation of at least 1.5 billion baht.
The company has been audited by Grant Thornton Thailand since KPMG departed in the wake of the 2014 scandal.
WEH’s five projects this year will be worth a combined 34 billion baht and represent total capacity of 720 megawatts. The company is planning three further projects (worth about 11 billion baht) that will add to the company’s three existing energy farms (worth 19 billion baht).
“We are looking at both early- and late-stage projects, and should make an acquisition in the second or third quarter of this year,” Mr Lakhaney said.
The company is also in the process of expanding its footprint in Southeast Asia and in Australia, where wind energy cost is already on a par (based on lifetime cost) with more traditional sources of energy. WEH will deploy three gigawatts by 2025, only a third of which will be in Thailand.
“Australia provides the opportunity of scaling quickly, while Southeast Asia is a longer game,” Mr Lakhaney said. “Myanmar, for example, is a good bet with 60-65 million people, but I can only deploy few if any megawatts there in the next five years.”
The bulk of the growth will come from Australia and other countries in Southeast Asia, not from Thailand, where regulations are threatening to cripple the development of renewable energy.
Energy Minister Siri Jirapongphan announced two weeks ago that the government would not buy renewable power over the next five years unless the prices offered were similar to those of traditional energy sources.
The government, which has purchased renewable energy at a subsidised rate of 8.50 baht per kilowatt-hour since 2007, said it will now pay no more than 2.40 baht per kilowatt-hour.
“If the minister’s announcement becomes true, we will simply go elsewhere,” Mr Lakhaney said.
On the flip side, the government’s long-standing subsidies have resulted in an oversupply of renewable energy — especially solar — which should bring the prices of these sources down soon, said Thun Reansuwan, chief financial officer of WEH.
“Our view is that the government will keep supporting renewables, but that the industry will develop at a slower rate,” Mr Thun said.
The company says it’s conducting business as usual three years after the scandal.
“If there were any sort of fraud,” Mr Thun said, “we would not be able to raise the money we have.”
Banks withdrew approvals for the close to 6 billion baht the company still needed in December 2014. In the aftermath of the financial debacle, close to a quarter of employees resigned or were fired, including C-level executives and all of the government financing staff, Mr Lakhaney said.
According to the story, extensively reported by local and international media, Mr Nopporn recruited three brothers of the past wife of now King Maha Vajiralongkorn in order to put pressure on Bundit Chotwitthayakul to reduce the 120-million-baht claim he held on Mr Nopporn.
Mr Bundit, a former business partner, refused to withdraw an embezzlement lawsuit against Mr Nopporn that dated back to 1997. The former billionaire, now living in Paris, maintains his innocence to this day.