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Abu Dhabi, UAESaturday 22 September 2018

Gulf Energy Development plans $4.6bn power plant spend after IPO

Thailand-based firm studying projects in Myanmar, Laos and Vietnam, where faster economic growth will probably boost demand for electricity

Thailand company sees opportunity to invest where electricity demand is likely to boom. Luke Sharrett/Bloomberg
Thailand company sees opportunity to invest where electricity demand is likely to boom. Luke Sharrett/Bloomberg

Gulf Energy Development’s billionaire founder Sarath Ratanavadi plans US$4.6 billion of investment in power plants over the next four years after the company’s listing this month.

The initial public offering’s proceeds will help fund some of the outlay, with the rest coming from loans, Mr Sarath, the company’s chief executive, said in his Bangkok office. His net worth is about $2.2bn based on Gulf Energy’s $733 million IPO, according to the Bloomberg Billionaires Index.

"Gulf Energy will have stronger financial leverage for more expansion following the IPO, as new power plants require a large amount of money,” Mr Sarath said. “The company is looking at a number of opportunities in Thailand and neighboring countries.”

The firm is studying projects in such countries as Myanmar, Laos and Vietnam, where faster economic growth will boost demand for electricity, he said. South East Asian nations are enjoying an economic boom, spurred by a global recovery that’s buoying exports.

Read about how Gulf’s IPO minted Thailand’s second billionaire in a month

Mr Sarath said the investment plan will focus on gas-fired electricity and probably cover acquisitions of existing power plants and green-field projects. Gulf Energy generates almost all of its power from natural gas and will double output to 4,647 megawatts by 2024, according to a filing.

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Coal faces regulatory curbs due to pollution and returns on renewable energy are comparatively low, Mr Sarath said. Such risks underscore the need for measured expansion, he added.

The IPO is the largest first-time share sale in Thailand since Jasmine Broadband Internet Infrastructure Fund priced a $1.7bn offering in 2015, according to data compiled by Bloomberg. It adds to the $2.5 billion of first-time share sales in the country this year, up from $1.5bn during the same period in 2016, the data show.

Thailand is set for a “strong recovery” after years of slow economic growth, Mr Sarath said, adding that industrial customers have boosted demand for electricity, steam and other supplies.

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