Investec to Sell Australian Assets to Increase Profit Margins

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Researched by Industrial Info Resources Australia (Perth, Australia)--After months of struggle, South African investment bank Investec Limited (Adelaide, Australia) has decided to close its energy development business in Australia to restructure the bank's Australian business. Investec expects that the sale of the Australian renewable energy assets will enable it to focus on its high-margin operation. The company has agreed to sell its share in the Hornsdale windfarm, along with two solar projects in Western Australia.

Investec is seeking potential buyers for the $900 million Hornsdale project, which is among the largest of proposed windfarms in Australia. According to sources, the company is eagerly looking for the right deal to exit from the project. "If I could divest it at a reasonable price, I would immediately," said Investec Australia's Acting Chief Executive Ciaran Whelan.

The Hornsdale project will involve the construction of 105 turbines, each with a capacity of 3 megawatts (MW), to produce 315 MW of electricity. According to Investec, it will sell three power projects, all in various stages of development. The two solar projects include a 50-MW Chapman Solar photovoltaic project in Western Australia, located on 315 hectares near Geraldton.

The Chapman solar project consists of two stages, which are proposed to produce 150 and 165 MW. A third project includes the 50-MW Mungari solar project in Kalgoorlie, where Investec had been negotiating a land deal.

Following the decision in July 2013, Investec has laid off several key people--up to 100 staff--from the renewable energy and infrastructure team to aid the business unit in Australia's profit index.

Sources within the company said the decision by Investec to close its energy business partially reflected the uncertainty about the renewable outlook in Australia. Yet just last year, then CEO David Clarke had said South Australia stood out as an ideal investment destination.

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