Abu Dhabi’s IHC acquires $490M stake in Turkish Kalyon Energy

August 11, 2022 admin-dominor

Abu Dhabi conglomerate International Holding Co (IHC) on Thursday announced it acquired a 50% stake in Turkish Kalyon Energy for 1.8 billion dirhams ($490 million) through one of its subsidiaries.

Kalyon Enerji is part of Turkish conglomerate Kalyon Holding, which is engaged in the construction, energy and aviation industries. IHC subsidiary International Energy Holding (IEH) will acquire the stake, the conglomerate said.

The transaction includes solar power projects in Türkiye’s Karapınar and Gaziantep regions and a wind power project in Ankara, IHC said in a statement to the Abu Dhabi stock market.

IHC is the most valuable company on the Abu Dhabi bourse with a market capitalization of around $167 billion.

Chief Executive Syed Basar Shueb said the deal was IHC’s second-biggest acquisition ever in the renewable energy sector.

Kalyon Holding, which has large solar and wind energy concessions in Türkiye, was in June reported having been in advanced talks with IHC to partner on strategic assets.

The transaction has great importance not only for Türkiye and the United Arab Emirates (UAE) but also on a regional scale, the chairman of Kalyon Holding, Cemal Kalyoncu, said in a statement.

“The steps we have taken in the energy sector and the investments we have made have attracted the attention of foreign investors,” Kalyoncu noted.

“As a result of our meeting and mutual evaluation with IEH, we agreed to transfer 50% of Kalyon Energy shares. This cooperation will be one of the most important milestones of Kalyon Holding on its way to becoming a global brand.”

“As climate change is the defining challenge of our time, we will continue to step up our efforts to transform the world into a sustainable green economy,” he added.

Cemal Kalyoncu, chairman of the board of Kalyon Holding. (Courtesy of Kalyon Holding)

Türkiye obtains the vast majority of its energy from imports and in order to boost its renewable energy production, it began large-scale solar and wind power station tenders in 2017.

The Kalyon Karapınar Solar Power Plant, which is included in the deal, will be capable of meeting the annual electricity needs of 2 million people once it is completed in 2023, IHC said.

The 1,350-megawatt (MW) solar power plant is being built in the central province of Konya. It will be the biggest solar power plant in Europe built on a single site and one of the five biggest in the world. The total investment to be made in the massive project is estimated to be around $1 billion.

Kalyon also has a solar panel plant with a yearly 1,000 MW production capacity in Ankara. This capacity is now aimed to be lifted to 2,000 MW, Kalyoncu said.

The fresh capital will provide a noteworthy foreign currency inflow for Türkiye and will be used to add new solar and wind energy investments, he added.

The deal follows a visit last November by the United Arab Emirates’ now-president, Sheikh Mohammed bin Zayed Al Nahyan, to Türkiye where he met Turkish President Recep Tayyip Erdoğan.

During the visit, the first in years that came amid efforts by the two regional rivals to mend strained ties and ramp up economic cooperation, Emirati and Turkish officials signed billions of dollars in investment deals, including for energy.

IHC is chaired by Sheikh Tahnoun bin Zayed Al Nahyan, the UAE’s national security adviser and a brother of Sheikh Mohammed.

Takeovers in ‘buyers’ market’

Shueb on Wednesday said IHC expects to increase its takeover activity, including in India and Türkiye, as global market turbulence has created “a buyers’ market.”

IHC is aiming for publicly listed companies in growth markets, Shueb told Reuters, adding that it was also looking in South America and Indonesia.

“The public domain market has really corrected itself in some of the assets,” he said.

“But in the private domain, it is still difficult to negotiate with the owners because they all are still living in a year-old world where the valuations were extremely high. It’s not a sellers’ market, it’s a buyers’ market now.”

IHC, which straddles sectors from health care to real estate to IT and utilities, made 70 acquisitions at a total value of 10 billion dirhams ($2.72 billion) this year.

Its highest profile deals include a 7.3-billion-dirham investment in three of India’s Gautam Adani companies in May this year.

Rising interest rates and predictions of a global downturn have made IHC more selective as valuations in private markets do not reflect current market conditions, Shueb said.

He also said the company was seeking sizeable acquisitions, rather than smaller deals, to boost its bottom line, although he did not give an indication of how large.

The company on Monday reported a 137% year-over-year increase in net profit for the first half of the year to 10.35 billion dirhams. IHC’s stock has risen over 120% so far this year to trade at 348 dirhams a share.