CDC Globeleq, the emerging markets power company of CDC Group, the emerging markets investor owned by the UK government through its Department for International Development, has agreed to contribute $127m in cash to acquire two Bangladeshi energy units owned by AES Corporation.
The deal, which has a total value of $437m including equity and assumed debt, is for two combined cycle gas turbine plants located close to Dhaka, the Bangladesh capital. Haripur, a 360-megawatt plant, started generating power in 2001 and Meghnaghat, a 450-megawatt plant, became operational at the end of 2002.
Backed by the World Bank, Asian Development Bank and Government of Bangladesh, the projects together represent 25 per cent of the country's generating capacity. This investment follows CDC Globeleq's acquisition, in December, of power generation plants in Tanzania and South Africa from AES. The move is the latest stage in the company's plan to become the leading operator of power in the emerging markets.
CDC Group chairman Lord Cairns said: “This investment underlines our commitment to the strategic development of the power industry in South Asia. The investment in Bangladesh will allow us to bring our technical and commercial expertise to these plants and enable us to develop them in a socially responsible manner whilst producing good returns.”
As part of the deal, CDC Globeleq will take over AES's commitment to provide more than $1m funding for the construction of a new hospital, a school and a bridge.
As part of its restructuring announced in August, CDC Globeleq was established to manage CDC's existing $350m portfolio of power businesses, making further acquisitions in emerging markets. The firm’s six existing CDC power investments in South Asia, including India, Pakistan, Sri Lanka and the Philippines will offer the potential for regional synergies with Haripur and Meghnaghat.