Armstrong, IFC back Vietnam hydropower producer
Armstrong Asset Management and the International Finance Corporation (IFC) will invest in Vietnamese hydropower company Gia Lai Electricity (GEC).
The investment via a dedicated renewable energy private equity fund based in Singapore will include about a $10 million commitment from IFC for a 16% stake. Armstrong will take a 20% stake in the company for an undisclosed contribution. The deal represents both investors' first participation in Vietnam's power sector.
"We believe GEC is well positioned to capture the strong growth potential in Vietnam's renewable energy sector," Andrew Affleck, Armstrong's managing partner said in a statement. "Armstrong's aim is to share the knowledge and experience we have gained from developing and constructing multiple renewable projects in neighboring Southeast Asian markets to help GEC to continue to build a leading position in Vietnam."
Founded in 1989, GEC is considered one of the largest private sector hydropower players in Vietnam with 84.4 megawatts of installed capacity across 15 run-of-the-river small-scale hydro power plants as well as some exposure to the wind and solar sectors. The company is currently 87%-owned by domestic sugar manufacturer Thanh Thanh Cong, which has a 79 MW biomass power portfolio.
Hydroelectricity is the world's largest source of renewable energy source and accounts for one-fifth of global electricity supply. During the last decade, IFC has invested more than $1 billion in 75 hydropower projects in 25 countries.
Vietnam has seen a boom in hydropower investment over the past decade which has resulted in estimates that the sector accounts for more than two-thirds of domestic energy production. The US Energy Information Administration has called for growth in renewable power sources in the country, having reported that local electricity consumption will continue to expand at recent annual rates of 10-12%, more than tripling last year's level of power demand by 2030.
Recent private equity activity in this space has included the Denham Capital-backed purchase of a 30 MW project managed by Viet Hydro.
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