CDH, DCP to invest $70m in China's Sunpower
DCP Capital Partners, a private equity firm established by the former China heads of KKR, has agreed to jointly invest $70 million alongside CDH Investments in Chinese energy industry supplier Sunpower.
The investment will be made via the subscription of convertible bonds priced at S$0.60 per share and due in 2022. Shares in Sunpower, which is listed in Singapore, traded steadily after the announcement on May 23 in a range of S$0.48-0.50. The stock is set to open on May 24 at S$0.50.
According to a filing, DCP will contribute $60 million to the investment. As part of the transaction, Sunpower has agreed to issue DCP and CDH warrants exercisable for a total of $30 million at a price of S$0.70 per share by the end of 2019. These may be exercised as late as 2020 at a price of S$0.80 apiece.
Both DCP and CDH are both existing backers of the business. CDH invested $110 million in late 2016 via its fifth US dollar China fund for a 28.2% stake at a price of S$0.50 per share. The firm subsequently transferred $60 million worth of its holding to DCP under unspecified terms.
The fresh capital will be applied to expanding Sunpower’s environmental energy portfolio, which currently includes four operational projects in China. The company expects to support this effort with an additional $245 million in bank financing.
Founded in 1997, Sunpower aims to capitalize on growth in the smog prevention segment in China through services related to energy conservation, waste-to-energy and renewable energy. The company also operates across equipment manufacturing and a range of project development business models that combine expertise in construction and installation management.
CDH is currently raising its sixth US dollar fund with a target of $2.5 billion. It invests primarily in China but will make investments overseas where there is a China angle.
DCP was established in 2016 by David Liu and Julian Wolhardt, previously KKR’s head of China and regional leader for China private equity, respectively. It is said to be raising a fund of at least $1.5 billion.
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