GS EPS-Mirae Asset consortium buys 10% stake in US gas power plant

A consortium of South Korean power producer GS EPS Co. Ltd. and Mirae Asset Daewoo Co. Ltd. has agreed to buy a 10% stake in a New Jersey-based gas power plant from two US investment firms, a deal reportedly worth about 120 billion won ($108 million).

Under the agreement, GS EPS and Mirae Asset Daewoo will acquire common shares in Linden Cogeneration Complex for a 10% stake from Ares EIF Management LLC and Oaktree Capital Management LP, according to GS’ statement released on August 30.

No financial details of the transaction were disclosed.

Edaily, a news provider, said the transaction is worth an estimated 120 billion won, citing unnamed industry sources.

After the stake sale, Ares EIF and Oaktree will retain 14% of the thermal power cogeneration complex, respectively. JERA Co. Inc., Japan’s energy company, is the largest shareholder with 50%.

Mirae Asset, a securities company, will make principal investment in the equity stake, while seeking to resell part of the interest to other institutional investors through a vehicle of Hana Alternative Asset Management Co. Ltd., according to a source with knowledge of the deal.

The transaction marked the first investment by a South Korean financial services company in ordinary shares in a US power facility.

With the stake purchase in the 972MW power complex, GS EPS will gain a toehold in the US electricity market, becoming the first South Korean independent power producer to take an equity stake in a US power generation facility.

“With the stake acquisition, we can now participate in the board of directors of the Linden gas power plant as a registered member, so we expect to build diverse knowledge about the US power industry and power market,” GS EPS said in the statement.

Linden Cogeneration Complex sells power to the wholesale electricity market in the State of New York and the Pennsylvania-New Jersey-Maryland (PJM) energy market. It also sells power and steam produced during the power generation process to Bayway Refinery of Phillips 66 in the Port of New York and New Jersey.

The equity deal comes a few days after GS Group, the parent company of GS EPS, unveiled a 20-trillion-won investment plan for the next five years. Under the plan, the energy and retail giant will spend 14 trillion won on its petrochemical plants and energy production facilities over the next five years, or 70% of the total spending earmarked for the period.

GS EPS operates 2,406MW LNG-fired combined cycle power plant, 105MW biomass power facility and 30MW wind power mill in South Korea.

In 2017, JERA bought a 50% stake in Linden Cogeneration Complex from Oaktree Capital, Ares EIF and other co-investors.

By Daehun Kim

daepun@hankyung.com

Photo: Getty Images Bank