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    US private equity firm KKR expands into renewables


    May 17, 2022 - AFP World News

     

      British-based power generation firm ContourGlobal on Tuesday accepted a private equity takeover rooted in demand for greener energy, amid broader market turmoil linked to the Ukraine conflict.

      The thermal and renewable power plant operator has agreed to a £1.75-billion ($2.1-billion, 2.0-billion-euro) bid from US private equity giant KKR, it said in a statement citing decarbonisation targets.

      "The energy transition is driving substantial changes in the underlying energy markets and, as such, will require sustained capital investment and business agility," it added.

      "KKR believes it can support ContourGlobal in its ... strategy which aims at a meaningful 40-percent reduction of CO2 emissions intensity by 2030, and to be net zero carbon by 2050."

      The London-headquartered firm owns 138 power plants in Africa, Europe, Latin America and North America.

      KKR will pay 263.6 pence, representing a 36-percent premium to Monday's closing price.

      Tuesday's news sent the group's share price rocketing by one third to 256.50 pence in late afternoon deals.

      ContourGlobal, founded in 2005 by US entrepreneur Joseph Brandt and US-based investment fund Reservoir Capital, floated on the London stock market in 2017.

      "ContourGlobal's track record, business model and financial performance suggested the shares were too cheap, especially as this is a company which provides energy when the world is crying out for it," said AJ Bell investment director Russ Mould.

      "The company also ticks another important box, in that it has no plans to work on any new coal-fired projects," added Mould, noting that one third of its output "already comes from solar, wind and other forms of renewable energy".

      World energy markets have surged this year on supply fears after key gas and oil producer Russia launched its invasion of Ukraine in February.

      ode-rfj/lth

      KKR & CO

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