Standard Chartered Private Equity (SCPE), the private equity arm of global bank Standard Chartered, has invested $25 million in Indonesian power plant developer, owner and operator Navigat Group, according to a joint statement.
This investment follows on a $58 million investment in Navigat in January 2012, which SCPE made from its $658 million Standard Chartered IL&FS Asia Infrastructure Growth Fund, a joint venture infrastructure fund with Indian conglomerate IL&FS. This $25 million investment, however, came solely from SCPE. The combined equity investments will give SCPE a more than 25 percent stake in Navigat.
The fresh equity investment also coincided with a $270 million debt refinancing for Navigat, in which Standard Chartered Bank and Singapore-based OCBC Bank were the joint arrangers. The proceeds from the new debt and equity will be used to accelerate Navigat’s growth in the hope of achieving its target of 1,000 megawatts (MW) of operating capacity by 2015.
“What we saw was an opportunity to accelerate the growth program of Navigat that was already going so well,” Greg Karpinski, co-head of the energy, resources and infrastructure team within SCPE, told Infrastructure Investor. He estimates that the company is already approximately 40 percent ahead of the original investment forecast made last year, and the focus will now be on growing the company’s power plant footprint, he added.
“The company now has active operations throughout Indonesia, Thailand, Singapore and Myanmar, and with the additional capital we anticipate a rapid expansion of our power generation fleet in the next 24 months,” Sebastiaan Sauren, chief operating officer and co-founder of Navigat, said in the statement. In all, Navigat has 265MW of installed capacity across its operations.
SCPE declined to comment on the returns it is expecting from the investment. However, Karpinski noted that SCPE generally seeks private equity-level returns, even from its infrastructure investments.
“Over the past two years, we have built a strong relationship with the Navigat team and have been impressed by the company’s outstanding performance and the “can-do” spirit of its talented team,” Karpinski said in the statement. “By working together with our colleagues from the wholesale banking business, Standard Chartered was able to provide a comprehensive and innovative financing solution that will ensure the company is well capitalised for the coming years.”
SCPE invests the balance sheet money of Standard Chartered, and focuses primarily on companies in need of expansion capital or acquisition finance, and management buy-outs. Globally, the firm considers power to be one of its core competencies, Karpinski said.
Having invested $3.9 billion to date, the investment arm’s geographic focus is Asia, Africa and the Middle East – where Standard Chartered Bank gets 90 percent of its income and profits. In Indonesia specifically, the firm has invested around $300 million over the past two years.