Babcock & Brown buys power assets

Australia-listed investment and advisory firm Babcock & Brown has acquired NRG Energy’s South Australia power assets (NRG Flinders) for A$317 million.

Global investment and advisory firm Babcock & Brown has acquired 100 percent of the issued share capital and shareholder loans of NRG Flinders, a company accounting for over 50 percent of the energy produced in South Australia.

Babcock & Brown is spending approximately A$317 million ($237m; €183m) on the purchase, which is subject to conditions. The enterprise value of the business is A$513  million ($381m; €297m). The acquisition value represents a 2005 EV/EBITDA multiple of approximately 11.8 times, according to a statement. NRG Flinders’ EBITDA in the year to 31 December 2005 was A$43.5 million.
The deal is slated to be completed in the third quarter .

NRG Flinders’ power generating capacity totals 760 megawatt (MW), Babcock & Brown said. The power stations to be acquired are Northern Power Station, a 520 MW coal-fired power station in Port Augusta, and Playford Power Station, a 240 MW coal fired power station adjacent to Northern Power Station. In addition, Babcock & Brown will also acquire Leigh Creek Coal Mine, which supplies to the two coal power stations.

Peter Ho, head of global infrastructure at Babcock & Brown, said: “The acquisition of the NRG Flinders assets will assist Babcock & Brown in its objective of establishing a listed Babcock & Brown branded, large-scale diversified power generation fund, potentially by the end of 2006. Such a fund would have assets with a diversified mix of locations, fuel sources, plant types and off-take arrangements.”

Upon completing the acquisition of NRG Flinders, Babcock & Brown will have a power generation portfolio of 3,000 MW of power plants either in operation or construction in Australia, according to the statement.

With a network of 21 offices worldwide, Babcock & Brown was founded in 1977 in San Francisco and listed October 2004 on the Australia Stock Exchange. Earlier this year, Babcock & Brown acquired Texas-based G3 Energy, which has more than 500 MW of winder power projects under development across North America.