Herbert Smith Freehills has advised IFM Investors on the sale of Ecogen to EnergyAustralia for an enterprise value of A$205 million.
Ecogen is the owner and operator of the 510MW Newport power station and 440MW Jeeralang power station, both located in Victoria. The two power stations provide peaking and intermediate-load generation and account for around 9% of Victoria’s generation capacity. Since 1999 they have been operated by Ecogen under a Master Hedge Agreement with EnergyAustralia and its predecessors. The Master Hedge Agreement is due to expire in 2019.
IFM Investors acquired its initial interest in Ecogen in 2003, and took 100% control in 2008. IFM Investors’ head of global infrastructure, Kyle Mangini, has noted that Ecogen has provided an equity return in excess of 12% over the life of the IFM investment.
The Herbert Smith Freehills team was led by partner David Ryan, with assistance from partners Nick Baker, Robert Nicholson, Miles Wadley and Matthew Bull, senior associate Bailee Walker and lawyers Kai Ito, Michael Trent and Dinisi Sirimanne.
David Ryan commented: “There is ongoing uncertainty in the Australian electricity and gas markets. Following expiry of the Master Hedge Agreement in 2019, the merchant electricity and gas exposure of the Ecogen asset would have less of a strategic fit for an infrastructure investor such as IFM. It is an opportune time for IFM to exit its successful investment in Ecogen. As always, it has been a pleasure working with the IFM Investors team.”
IFM Investors was also advised by Lazard and PwC and EnergyAustralia was advised by Morgan Stanley and Ashurst. The IFM Investors team was run by Michael Landman and David Stegehuis, with Sharon Michael, Paul Tempone and John O’Grady.