State-owned Chinese company buys Australian energy retailer to boost local renewable plans

Gullen Range Wine Farm.

Australian owned energy retailer CovaU is set to be acquired by the local subsidiary of state-owned Chinese energy company Beijing Jingneng Energy International (BJEI) in a deal expected to be worth approximately $100 million.

CovaU (pronounced “cover you”) is an electricity and gas retailer owned by the ASX-listed TPC Consolidated Ltd, and is being touted by the Chinese company as a key step in building a renewable energy business in Australia.

It comes just months after BJEI announced the purchase of five Australian solar projects totalling more than 1 GW, for an equity value of $813 million, from Lightsource bp.

That purchase, announced in December, took the total portfolio of the BJEI group and its associated companies in Australia to more than 2GW. Its assets also include the 165.5MW Gullen Range wind farm and the neighbouring 10MW Gullen solar farm.

“The proposed acquisition of TPC would further strengthen and diversify the company’s position in Australia and underpins our continued commitment to the Australian renewable energy market,” said Warwick Smith, a former federal Liberal minister and now chairman of the Australian board of Wollar Solar.

“Acquiring a well-established energy retail business is part of our longer-term strategy to diversify and de-risk the revenue portion of the business and we look forward to continuing to deliver value to TPC’s customer’s and the wider market.

“Today’s announcement is another important step in our aim of building a renewable energy business that has the potential to be taken to the Australian Securities Exchange so that the Australian public can share in the long-term success of the company moving forward.”

The TPC board has unanimously recommended the acquisition, which would see shares bought at up to $15.82 per share.

TPC chairman Greg McCann said the board came to this view after considering a number of different valuation scenarios, potential risks relating to the future execution of TPC’s business growth plan, and the price at which TPC shares could trade over the medium- to longer-term if it continues as an ASX-listed company.

The company posted half year revenues of $66 million in the December half and net profit of $1.2 million. It serves household and commercial customers across the country.

The parent companies of BJEI and BJCE Australia and the whole-owned subsidiary Wollar Solar operate more than 12GW of electricity generation across China.

The ultimate owner is the state-owned Capital Operation and Management Co Ltd which operates in automobile manufacturing and sales, as well as steel manufacturing, real estate, agriculture and food, and other businesses.  

Joshua S. Hill is a Melbourne-based journalist who has been writing about climate change, clean technology, and electric vehicles for over 15 years. He has been reporting on electric vehicles and clean technologies for Renew Economy and The Driven since 2012. His preferred mode of transport is his feet.

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