Apex Clean Energy could divest additional Oklahoma wind farms, CEO says

Date: Jan 2016

Apex Clean Energy, a privately held wind power development company, could sell one of four Oklahoma wind farm projects but does not see itself taking part in any substantive acquisition activity this year, CEO Mark Goodwin said in an interview.

Charlottesville, Virginia-based Apex sees the five-year extension of the federal production tax credit (PTC) creating a stable, long-term environment for developers like Apex to increase 2016-17 project installations, Goodwin said.

Increased project valuations stemming from the buoyant US renewable energy market, including the past year’s frothy yieldco market, has continued to yield high price points for advanced-stage wind projects, he added.

An industry advisor said wind M&A transactions continue to draw close to USD 1.8m per MW, equivalent to multiples fetched by publicly-held yieldcos or utility companies since the mid-2014.

Meanwhile, the PTC extension and the Obama Administration’s Clean Power Plan, finalized in August, create a positive long-term outlook for Apex to raise project financing to fund four projects this year from its sizeable 10.6 gigawatt three-year project pipeline, Goodwin said.

Historically, Apex has ascended to the top ranks of US wind farm developers by partaking in 20 acquisitions of advanced-stage projects from 2009 to 2014 by sellers “deciding to vacate their wind investments,” Goodwin said. However, Apex is no longer a long-term owner of assets like a utility or yieldco, he said.

Before the cyclical shift towards yieldcos created a higher premium per project, Goodwin said Apex routinely bought wind projects ranging from 200 MW to 600 MW from a range of sellers, including Nordex USA, BP Wind and Duke Energy (NYSE: DUK), which is itself now a serial aggregator of utility-scale wind and solar assets.

While the company has no impetus to sell assets to the yieldco market, which currently has little appetite for deals, Apex could always entertain offers for its large utility wind projects from the likes of utility companies or investors, such as infrastructure and private equity funds, Goodwin said.

In 2015, Apex sold 598 MW of Oklahoma wind farms to fund managers D.E. ShawRenewables and First Reserve in separate transactions, according to its website. Of those sales, the 298 MW Kingfisher and 300 MW Balko Wind project easily commanded close to USD 550m per project, said the industry advisor not involved with the deals.

The remainder of Apex’s late-stage projects are also in Oklahoma, and range from 250 MW to 300 MW per project, Goodwin said. The 299 MW Kay Wind project in Kay County, Oklahoma, is expected to be acquired by Southern (NYSE: SO) following completion of the project, expected in the next month, according to a press release. Southern already entered an agreement to purchase half of the project assets, the release showed.

Goodwin declined to comment on the company’s relationship advisors. Apex was advised by Macquarie Capital and Barclays Capital for the 2014 and 2015 sale of its projects, according to the industry advisor. Its corporate counsel is Morrison & Foerster, according to the law firm’s website.

Apex pursues wind farm projects in 25 states and has raised close to USD 700m in project financing to date for projects, primarily in Oklahoma, according to its website. The state makes up roughly 20% of the company’s project pipeline.

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