Scatec ASA Announces Sale of Wind Farm in Vietnam
Recently, Scatec ASA has made a significant move by agreeing to sell its Dam Nai Wind farm, a key renewable energy asset located in Vietnam. This 39-megawatt (MW) wind facility, along with the operating company, will be transferred to Sustainable Asia Renewable Assets, which is part of the SUSI Asia Energy Transition Fund.
Transaction Details
Upon completion of the deal, Scatec is set to receive an upfront payment of USD 27 million for its full equity stake in the wind farm. Additionally, there’s potential for earn-out payments that could reach as much as USD 13 million, depending on certain future scenarios. This strategic decision supports Scatec’s ongoing efforts to streamline its portfolio and focus on market opportunities with greater growth potential.
Insights from the CEO
Scatec's CEO, Terje Pilskog, shared his thoughts on the sale, noting that the company is stepping away from Vietnam after overseeing the Dam Nai wind farm following the acquisition of SN Power in 2021. He expressed his satisfaction with the sale price and confidence in SUSI’s ability to further promote renewable energy development in Vietnam. Pilskog also recognized the hard work of local teams, stakeholders, and partners during their management of the project.
Financial Aspects of the Sale
The deal sheds light on an estimated enterprise value of USD 68 million, factoring in the potential earn-out payment. As of the end of the second quarter of 2024, the wind farm had roughly USD 28 million in net interest-bearing debt. Since taking ownership in 2021, this asset has generated approximately USD 14 million in cash flow for equity holders.
Plans Following the Sale
Scatec expects the transaction to be finalized within the first half of 2025, provided that standard regulatory approvals are obtained. This move is also anticipated to result in an accounting gain of about USD 8 million, reflecting Scatec's consolidated financial position and the estimated fair value of the contingent payment. However, after the sale, Scatec will incur exit costs estimated at about USD 4.5 million due to halting operations at the wind farm in Vietnam, which will be reported in their third-quarter results for 2024.
About Dam Nai Wind Farm
The Dam Nai Wind farm is a significant infrastructure initiative featuring 15 Siemens wind turbines, contributing to a total capacity of 39 MW. It’s situated in Ninh Thuan province, an area recognized for its renewable energy production potential.
Historical Background
Scatec Solar Netherlands B.V. acquired SN Power Vietnam Renewables B.V. in May 2021, which led to the formation of Dam Nai Wind Joint Stock Company as a wholly owned subsidiary. Additionally, Scatec Solar Solutions Vietnam Co., Ltd was established in February 2020 as a fully owned subsidiary through its parent company.
Future Directions for Scatec
As Scatec continues to refine its operations and geographic focus, it is committed to expanding its renewable energy projects across various markets. With a portfolio of 4.7 gigawatts currently in operation and under construction, the company is poised to play a significant role in the global development of sustainable energy solutions.
Frequently Asked Questions
What is Scatec ASA's recent business decision?
Scatec ASA has decided to sell its Dam Nai Wind farm in Vietnam to SUSI Asia Energy Transition Fund as part of a portfolio optimization strategy.
What are the financial benefits for Scatec from this sale?
Scatec will receive an upfront payment of USD 27 million, with potential additional earn-out payments of up to USD 13 million, along with a projected accounting gain of USD 8 million.
Why is Scatec exiting Vietnam?
The exit aligns with Scatec's focus on markets that present more attractive growth opportunities, following their management of the wind farm since 2021.
When is the expected closing date for the transaction?
The transaction is anticipated to be finalized within the first half of 2025, pending regulatory approvals.
What is the future outlook for Scatec ASA?
Scatec aims to continue expanding its renewable energy capacity, focusing on strategic regions and opportunities for sustainable growth.
