Singapore-listed environmental protection solution company Sunpower Group Ltd has completed the acquisition of 90 per cent stake in China-based Changshu Suyuan Thermal Power Co., Ltd for 293 million yuan ($41.5 million) valuation, according to a press statement.
Suyuan Thermal Power is the exclusive steam supplier in Changshu city in Suzhou, a mainstay for textile and garment industry in China, for over 40 years. These industries account for over 100 billion yuan of annual turnover.
The acquisition is expected to add to Sunpower Group’s recurring, long-term income and cashflow.
The demand for Suyuan Thermal Power in Changshu city is expected to increase significantly once the state policies on reduction of coal consumption and rectification of small and inefficient boilers is implemented by 2020.
Besides, several printing and dying companies in the surrounding areas are expected to move into the coverage area of Suyuan Thermal Power. Sunpower will utilize its technical capabilities as well as management experience to upgrade Suyuan Thermal Power’s facilities.
On the other hand, the acquisition is also one of Sunpower Group’s medium-to-long term strategy to build a sizeable and valuable portfolio of green investment assets, executive chairman Guo Hongxin said. The company expects a substantial net present value (NPV) of future cashflows and double-digit investment returns from Suyuan Thermal Power acquisition.
Following this acquisition, Sunpower Group will have eight operating green investment projects and five under development stages. The company is planning to invest $2.5 billion in equity for its GI portfolio by 2021, Guo added.
According to the press statement, Suyuan Thermal Power’s sales revenue has grown steadily in the past three years supported by the flourishing textile and garment industries in Changshu city.