Scatec sells its shares in Upington solar plants to finance further growth

Scatec ASA, a leading renewable energy company in emerging markets, has signed an agreement with a subsidiary of STANLIB Infrastructure Fund II, managed by STANLIB Asset Management Proprietary Limited, to sell its 42% equity share in the 258MW Upington solar power plant for a gross consideration of ZAR979-million.

“This transaction is in line with our strategy to optimise our portfolio as presented at our Capital Markets Update in September 2022 and will release capital for new investments in renewable energy. We are very pleased to secure a value accretive transaction and are confident that Stanlib will be a solid owner of the asset going forward,” says Scatec CEO Terje Pilskog.

The solar plants in Upington were awarded in the fourth bidding round under the Renewable Energy Independent Power Producer Programme and reached COD in 2020. The plants generate approximately one third of the proportionate power production EBITDA in South Africa for Scatec. Scatec will continue to provide Operations & Maintenance and Asset Management services to the Upington power plant.

“We entered South Africa back in 2010 and have since grown into a leading renewable energy player in the country. South Africa remains a focus market for us, and we will continue to build scale through new investments, including the Kenhardt project under construction and the new Grootfontein project secured in the fifth bidding round,” adds Pilskog.

“Scatec is a long-term player, and is truly invested in expedited investment and establishment of renewable energy solutions globally (and locally). This transaction does not indicate an exit for Scatec, but a strenghthening of our local and regional position. With the capital raised, we will be able to support and further drive our ambitions and projects in South Africa – and the broader Sub-Saharan Africa region,” says Jan Fourie, Executive Vice President Sub-Saharan Africa.

“We are excited about this positive change for Scatec. We are proud to enter into a transaction with a reputable South African partner such as STANLIB – this demonstrates a maturity for the South African renewable energy industry. It also supports our ambitions to invest in South Africa’s future and move the country’s energy and climate goals forward. Since Scatec will continue to provide Asset Management services to the Project Companies, this means that our Asset Management and Sustainability teams will continue to invest in skills development, career development and SME opportunities in the broader Upington region. We will also continue our local partnerships that help us make a difference in surrounding communities.”

The transaction is expected to generate a net accounting gain of approximately Nokia Oyj (NOK) 760 million on a consolidated basis and NOK 310 million on a proportionate basis. The difference is primarily explained by the D&C margin related to the projects which has been eliminated in the consolidated statement of financial positions. The final accounting effects will be determined on closing of the transaction.

Norfund is also selling its 18% equity share to STANLIB as part of the same transaction. The transaction is subject to the customary consents and is expected to close in the first half of 2023.