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2 The Company
Solar Power Plants is a company formed to address the market gap and opportunity in Cambodia. For access to capital and tax efficiency, it will be structured as a Singapore holding company with a wholly owned subsidiary in Cambodia. The subsidiary will in turn own the solar power plants (SPPs). This is likely to be via Special Purpose Vehicles (SPVs) as each SPP will have its own land title. Our goal is to have 9x operational SPPs in 5 years.
Clean, reliable & affordable power for all No.1 SOLAR Independent Power Producer in SouthThe Solar Developer of choice
DNA Statements is a proprietary methodology of Bespoke Ventures Pte Ltd Confidential Page 1 Copyright 2012 Bespoke Ventures Pte Ltd
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Value Proposition Values Statement Call to Action Motto About Solar Power Plants
Design, Build, Own, Operate & Manage (DBOOM) Energy Security, Sustainability, Social Responsibility Shrink your carbon footprint Empowering change!
We serve municipal utilities and power distributors by providing a reliable power source that plugs seamlessly into their distribution grids. Specifically, we will serve Electricit du Cambodge (EDC) - Cambodias state utility - that itself serves 270,000 households, of whom are in Phnom Penh. We will sign 20 year Power Purchase Agreements (PPAs) with EDC.
Indahag Location: Philippines 1MW Solar Power Plant Being close to point of power consumption also greatly reduces transmission loss. Hence our SPPs will be located in the suburbs of Phnom Penh instead of in far-off remote locations. This also means we need not invest in transmission infrastructure since we plug directly into the grid. We will tender out the plant builds to three preferred EPC (Engineer Procure & Construct) contractors: juwi (http://www.juwi.com/), Phoenix Solar (http://www.phoenixsolargroup.com/en.html) and Sunlabob (www.sunlabob.com). Confidential Page 2 Copyright 2012 Bespoke Ventures Pte Ltd 04/07/2012
5 Target Market
The Cambodian power market is severely under-served. And just as important, power is unsubsidized. This means that there is no market distortion and free market forces determine power prices based on demand-supply dynamics. Solar therefore competes on a level playing field. Our cost per kWh is US$0.11, so we can sell it at US$0.35 for a profit of US$0.24. Having said that, the Cambodian governments 2003 Renewal Energy Action Plan calls for the following: (i) (ii) (iii) (iv) supply 5% of new electricity generation about 6 MW through renewable energy technologies supply 100,000 households with electricity from renewable energy sources on a competitive basis provide 100,000 households with electricity through the use of solar photovoltaic systems establish a sustainable market for renewable energy systems
In conjunction with the political capital and connections of the SPP team (see below), this means that securing the necessary permits and licenses will be expedited. Moreover, we will most likely qualify as a Qualified Investment Project (QIP). This is a tax incentive scheme administered by the Council for the Development of Cambodia (CDC). It provides a 6 year tax holiday.
Victor Ong is the Managing Director and the Co-founder of Live Capital Pte Ltd. Victor has more than 15 years of business development experience in the energy sector originating transactions in both the LNG and LPG storage segment, citygas distribution segment, conventional and renewable power segment, agriculture and food processing segments. Most of Victors Confidential Page 3 Copyright 2012 Bespoke Ventures Pte Ltd 04/07/2012
transactions origination experience in the last 7 years has been in the markets of Vietnam, Cambodia, Malaysia and Indonesia gained through his business development experience with Dutch multinational Royal Vopak and a multi-lateral infrastructure fund managed by InfraCo Asia Development, an initiative funded by the IFC (World Bank Group) and a consortium of 7 European Governments. During his stint with InfraCo Asia, Victor originated and executed several notable transactions in the agriculture, food procesing and renewable energy sector in Cambodia and Vietnam. At Royal Vopak where he had worked in the business development group for close to 5 years, Victor most recently originated a USD 300 million, 2 million tons per annum LNG regasification import terminal project in Peninsula Malaysia which is currently in an advanced stage of development.
7 Return on Investment
Each SPP will cost US$4M to build. Each parcel of 1.5Ha land will cost US$1M. Based on a total investment of US$5M, each SPP will generate an annual gross yield of 7%. As such, each SPP will be cashflow positive and profitable from the start of operations. When we have a portfolio of at least 9x SPPs, we believe we will be in a position to IPO on the Cambodian stock exchange (http://www.csx.com.kh). Phnom Penh Water Supply Authority (PPWSA) which IPOed 18 April 2012 is a good benchmark. Firstly, its a utility play, just like solar power plants (i.e. dividend-income counter). It was 17 times oversubscribed. The Market Cap was KHR502.5Billion (US$123.9M) on earnings of around KHR30Billion. So the P/E was 16.75. Assuming earnings of US$3.3M from 9x SPPs in Year 5, this implies a market cap of US$55.3M for Solar Power Plants Co., Ltd (Cambodia). Post-IPO, the next liquidity event will likely be a trade sale at a premium to market. Targets include conglomerates like YTL (http://www.ytl.com.my/), with power and utility interests. In addition, we are very bullish on the prospects for Cambodian real estate, specifically in Phnom Penh. In terms of site selection, we are aiming for semi-prime suburban land that has capital appreciation upside. This means that we are also land banking for future property development. For instance, it may make commercial sense to redevelop an SPP site into a shopping mall, whilst re-locating the SPP to the roof. Hence, allowing Solar Power Plants Co., Ltd to also play the real estate game. This capital gain on Net Tangible Assets will strengthen our balance sheet. Again, YTL is an especially appropriate acquirer because they are also property developers and can unlock further asset value accordingly. Moreover, we have direct access to their CEO. In terms of investor Exit, our aim is to IPO and/or trade sale within 5 years. Based on both dividend yield and capital gains, 20% IRR is highly achievable.
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