Japan's Orix Corp to buy 22.1% in Israeli renewable energy producer Ormat for $627 mn
05 May 2017
With a view to expnding in Asia, Japanese financial services group Orix Corp, yesterday struck a deal to buy a 22.1-per cent stake in Israeli alternative and renewable energy producer Ormat Technologies Inc for $627 million.
Orix acquired approximately 11.0 million shares at $57 a share, valuing the entire Nevada-based Ormat at $2.84 billion.
Orix, based in Tokyo, is buying the stake from a group led by the FIMI private equity fund, which includes Bronicki Investments, Ltd and senior management of the company.
Under the terms of a new commercial agreement between the two companies, Ormat will have exclusive rights to develop, own, operate and provide equipment for Orix geothermal energy projects in all markets outside of Japan.
In addition, Ormat will have certain rights to serve as technical partner and co-invest in Orix geothermal energy projects in Japan. Orix will assist Ormat in obtaining project financing for its geothermal energy projects from several leading providers of renewable energy.
Under related agreements, Orix will have the right to appoint three of its nominees to the board of Ormat and also a fourth person to be mutually agreed by Ormat and Orix to serve as a new independent director.
Founded in 1965, Ormat is a geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (REG).
The company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on its Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity.
It has 73 US patents, employs 474 people in the US and over 700 overseas.
The company currently owns or has installed to utilities totaling 2,200 MW of gross capacity.
Ormat's current 727 MW generating portfolio is spread globally in the US, Kenya, Guatemala, and Guadeloupe.
"We are excited to partner with ORIX, one of the world's leading diversified companies with operations in 36 countries, to advance the interests of both companies," said Gillon Beck, Ormat's chairman.
"We expect this collaboration will expand the number and quality of growth opportunities that Ormat enjoys around the world, particularly in Asia," Beck added.
''As one of Asia's leading investors in the renewable energy sector, and with a growing portfolio of renewable energy investments around the world, we recognise the importance of having clean, reliable, baseload power such as that which geothermal provides, and we believe that the geothermal sector has the potential to become an increasingly large component of the world's overall energy mix,'' said, Yuichi Nishigori, head of Energy and Eco Services Business at Orix.
Established in 1964, Orix operates a diverse portfolio of businesses in financial services, and investment spaces. Its business activities span industries including energy, private equity, infrastructure, automotive, ship and aircraft, real estate and retail financial services.