Chenya Energy was a wholly-owned subsidiary of Asia Cube Energy, a Taiwan-based renewables portfolio company I Squared Capital founded in 2017.
“Chenya went from 0MW, to the largest solar platform [in Taiwan] with over 400MW of plants under operation and development at the time of sale within three years,” Gautam Bhandari, managing partner at I Squared Capital, told Infrastructure Investor. He said Chenya was recently awarded another 60MW of solar capacity adding to the previous 344MW.
Chenya is building the world’s largest floating solar platform with 180MW of capacity in Changhua Coastal Industrial Park, an industrial cluster in Taiwan with many industries including food production, textile spinning mills, chemical and metal processors.
Asked why I Squared sold Chenya just three years after the firm invested in it, Bhandari said the solar developer had achieved the multiple on invested capital I Squared had sought in its original underwriting case.
“We are disciplined investors both on entry as well as exit. Being disciplined in exit pays when you consider crises such as the current covid-19,” he said. “Although the holding period of Taiwan portfolio is three years, the platform was founded back in 2015 when the management team made [its] first solar investment in China in 2016 and then moved to Taiwan in 2017.”
I Squared was an early entrant into Taiwan’s solar market when competition was limited, Bhandari explained.
“As Taiwan is an island with limited flat land and agriculture is important for the population, we focused on floating solar. Floating solar is also environmentally less impactful than piling, where you disturb the underground eco-system,” he said. “Another example is reclaimed land where deep piling is needed, floating solar is more competitive from [a] cost perspective. Floating solar also enjoys a 15-20 percent higher tariff compared to traditional ground-mounted solar.”
Chenya Energy is one of several assets the Miami-based firm has sold from its ISQ Global Infrastructure Fund I, which closed on $3 billion in 2015. According to the statement, ISQ Global Infrastructure Fund I has realised about $1.8 billion in equity value from its platforms alone.
Other realisations in the fund include: Singapore-based rooftop solar system provider Amplus Energy to Malaysia’s state-owned firm Petronas in April 2019; US-based co-generation facility Kendall Green Energy to global energy firm Veolia Energy North America last July; US hydroelectric company Cube Hydro Partners and Helix Partners to Ontario Power Generation last October; and US-based developer Lincoln Clean Energy to Danish power company Ørsted in October 2018.
I Squared has reportedly been looking to sell 100 percent of Asia Cube Holdings, which includes Chenya Energy’s former parent Asia Cube Energy, which has developed various renewables businesses such as offshore wind projects in Taiwan, Vietnam and South Korea, and natural gas generation in China.
Asked why I Squared tried to sell Asia Cube Holdings, last year, Bhandari replied: “These sale processes take a lot of time and the negotiations can last a while. It did not fail to sell as we sold the entire Taiwan solar platform to Marubeni.”