Allco in $250m wind flutter Investments

Australian
Tuesday 20/3/2007 Page: 22

Allco Finance Group has agreed to buy $US200 million ($250 million) worth of wind energy assets in Germany and France as part of a plan to start a new investment fund. The wind farms would have a capacity of 112 megawatts, Sydney-based Allco said in a statement yesterday.

The firm entered partnerships with closely held German developers WPD and JUWI to purchase wind farms and energy projects. Executive chairman David Coe has eight wind projects under construction or operating in the US and Europe.

Allco is buying energy assets, aircraft and property to boost management fees and earn more from leasing. In December, the firm unveiled plans to build a $US2.5 billion wind energy project in California to take advantage of rising institutional demand for wind investments.

Allco had a global pipeline of development projects with capacity of more than 2000MW, said Steen Stavnsbo, head of the firm's wind energy business. The European purchases include three wind farms in Germany, with a capacity of 60MW, according to the statement. The agreement also covers eight wind energy projects in Germany and France totalling
48.5MW. Allco's shares closed down 3c yesterday at $11.05.

Assets under management held in investment funds rose 36 per cent to $6 billion in the six months to December 31. The California project, the largest wind farm in the US, will be 75 per cent funded by debt. Allco is in the process of inviting partners to join the venture. Edison International's Southern California Edison unit will buy the power produced by the plant.

The project is in Tehachapi, a rural region northeast of Los Angeles which has had wind turbines since the 1980s. In December, the global head of Allco's infrastructure business, Nick Bain, indicated that North American and Australian institutions would probably invest in a fund to develop the project with Allco.

The $US200 million investment announced yesterday includes construction costs for a 24MW wind farm in Tehachapi that will be operational by October. Wind power is gaining in popularity among utilities as the most cost-competitive form of renewable energy.

US power producers will spend more than $US4 billion this year to construct a record 3000MW of wind turbine generators, according to the American Wind Energy Association. The installations will top last year's 2454MW of wind turbines and bring the US total to almost 15,000MW. Allco is part of a Macquarie Bank-led consortium bidding $11.1 billion for Qantas Airways.