Weaven's foresight pays off big time
JUST over two years ago, when Gary Weaven's Industry Funds Management wrapped up control of Pacific Hydro in a deal that valued the company at $780 million, the talk in the market was that he overpaid big time.
Put aside for a moment the fact that his average entry price into the stock was much lower, given IFM was an early investor and owned 34 per cent at about $1 a share compared to the $5 a share acquisition price.
Then consider that a third of the company's Australian assets are wind farms of a similar size to the Queensland Stanwell wind project acquired last week by Transfield Services for $450 million.
Throw in this week's decision by the Rudd Government to sign the Kyoto Protocol, which significantly broadens Pacific Hydro's ability to generate carbon credits from its offshore developments, and it's not much of a stretch to say the company is worth more than double its value in 2005. Weaven won a bidding war with Spain's Accione to buy 100 per cent of the company and his foresight has paid off in spades.
Pacific Hydro already sells carbon credits into the European trading system from his small Fiji hydro projects, generating a few million dollars worth of credits, and will now be able to generate significantly more from his Philippine and Chilean ventures.
(Read about Pacific Hydro's plans for Chile below:
SN Power, Norway, & Pacific Hydro, Australia, move on La Confluencia dam project on the Tinguiririca River- effort to reduce Europe's Carbon Emissions
Kyoto ratification crucial in Australian plans for Chile hydro-development – Carbon Offsets purchased in Europe critical to dam construction
Australia's Pacific Hydro finds a loophole: Climate change, Kyoto, and carbon trading
Chile Environment Exploited to Offset European Pollution )
The company is one of the first direct beneficiaries of the Government's move, but others can now quickly use the protocol to access offshore carbon abatement investments to lower costs.
This is precisely why former environment minister Malcolm Turnbull urged John Howard to sign the agreement once he had agreed to implement a carbon trading scheme, because it had the immediate benefit of helping Australian companies to lower costs.
Here is the full article.