Stonepeak seals first offshore wind deal in Taiwan

The acquisition of a 95% stake in the renewables division of chemical manufacturer Swancor, includes a stake in the 376MW Formosa II project.

New York-based fund manager Stonepeak Infrastructure Partners has made its first investment outside North America, acquiring one offshore wind project in Taiwan.

Stonepeak has bought a 95 percent stake in the renewables division of Swancor, a Taiwanese chemical manufacturer and offshore wind developer, for somewhere between $25.9 million and $101.4 million, the latter said in a statement.

The subsidiary, Swancor New Energy, holds a 25 percent stake in Formosa II, a 376MW project expected to become operational in 2021.

“The payment will be paid by installments and the actual total amount will be decided based on the contract and the completion status [of Formosa II], including the financing of Formosa II, and its development cost, among others,” Regina Liu, a spokeswoman for Swancor, told Infrastructure Investor without providing more details.

The Taiwanese company will retain a representative on the board of its former subsidiary, the statement said.

It is unclear whether Stonepeak is financing the acquisition through its maiden renewables fund. It is targeting $1.25 billion for the vehicle, as Infrastructure Investor first reported last month.

Hajir Naghdy, whom Stonepeak hired from Macquarie Capital at the end of last year to lead the fundraising from Hong Kong, did not reply to a request for comment.

According to the statement, the acquisition of Swancor New Energy will serve as a springboard for Stonepeak into other Asian markets, including Japan and South Korea.

An industry source said that the transaction made sense for Swancor, as the industrial manufacturer is hoping to focus on its core business, expanding their manufacturing plants and their investment in the production of wind turbine materials.

“The company had already sold a large stake in Formosa II to Macquarie Capital, and they were hoping to move away from the project after achieving the necessary permits,” the source said. Macquarie Capital is now the majority shareholder in Formosa II, holding a 75 percent stake.

Despite this, the decision by Swancor, the only local developer involved in the construction of Taiwan’s offshore wind projects, may reignite public mistrust in the sector, the source added.

“The election campaign [for the January 2020 presidential elections] is starting soon, and [the deal] can potentially trigger accusations against foreign companies just coming to Taiwan looking for profits,” this person said.

Taiwan’s opposition party, the Kuomintang, accused the government of profiteering from the 2018 feed-in-tariff regime, and denounced it as fraudulent last year.

A spokesman for Taiwan´s Ministry of Economic Affairs, Chung-Hsien Chen, confirmed to Infrastructure Investor that the deal is pending government approval, contingent upon several conditions: that Swancor retain a 5 percent stake in its subsidiary and a representative on its board; that the current “technical service” team of the project remain unchanged; and that Stonepeak retain its stake in the project until it has become operational.

According to Swancor’s spokeswoman, the company will retain its 7.5 percent stake in Formosa I, the first offshore wind project in Taiwan to become operational, which is not part of Swancor New Energy’s portfolio. Other shareholders in that project include Danish renewables developer Ørsted, Japanese energy company JERA and Macquarie Capital.