Arcapita announces $2bn partnership to develop 1,650MW of wind generation capacity in China

This is Arcapita's first investment in China.

The joint venture partners have signed a definitive purchase agreement to acquire Honiton Energy Holdings plc, a high growth Chinese wind energy generation company, which will build the portfolio. Honiton was established in 2005 to develop and operate wind power generation facilities within China, and to date, has 50 MW of installed capacity, and a further 100 MW in development.

In addition, the company has worked closely with the regional and state authorities in China, and has secured agreements to develop wind farms on 5 separate areas in China, representing a total of 2,244 square kilometres, on which it plans to develop its total capacity to reach 1,650 MW by 2012. Total installed wind energy capacity in China at the end of 2007 was 6,000 MW.

Arcapita's partner in this transaction is the Tanti group, an India conglomerate which together with the Tanti family owns 66% of Suzlon Energy, one of the world's leading suppliers of wind turbines. This partnership brings capital, as well as technical expertise and together, Arcapita and Colossus intend to invest at least $2bn into Honiton by 2012 for further wind development projects.

Atif A. Abdulmalik, Arcapita's Chief Executive Officer, commented "We have previously built expertise in this sector, which we are very pleased to be extending through this partnership with the Tanti group. We believe this is another high quality investment opportunity in Asia, where we have now done 7 transactions, 6 of which have been completed within the last 12 months. The total transaction value of our Asian portfolio is more than $5bn."

Arcapita sourced and executed the transaction out of its Singapore offices. Commenting on the transaction, Asim Zafar, head of Arcapita's asset based business said, "There is universal agreement that China's demand for energy will continue rising strongly from its current levels of 2,500 terrawatt hours annually. With increasing energy demand, rising fossil fuel prices and growing need for clean and renewable energy, wind energy has developed further than the existing alternatives in its potential for scale and efficiency. Honiton has an excellent asset base, as well as a management team with good relationships in China at a regional and state level, which already has a track record of achievement."

As well as being Arcapita's first investment in China, it is also Arcapita's first asset-based investment in Asia. Arcapita previously developed and then successfully sold a 391 MW portfolio of windfarms located in the United Kingdom.