Jarðvarmi slhf., which is owned by fourteen Icelandic pension funds, has exercised its right of first refusal to acquire a 53.9% stake in HS Orka hf. from Innergex, in addition to purchasing a 12.7% stake in the company from the ORK investment fund. Furthermore, Jarðvarmi has selected an international partner, Ancala Partners, which will subsequently acquire a 50% stake in HS Orka alongside Jarðvarmi. Jarðvarmi previously held a 33.4% stake in HS Orka.
In total, this involves the acquisition of a 66.6% stake in HS Orka. The combined purchase price for the shares is approximately 47 billion ISK.
Concurrently, a new company, Blávarmi slhf., owned by the same pension funds as Jarðvarmi, will acquire HS Orka’s 30% stake in the Blue Lagoon. The purchase price for the stake is approximately 15 billion ISK.
Prior to these transactions, Innergex had reached an agreement to sell its shares in HS Orka, subject to Jarðvarmi’s right of first refusal. As previously mentioned, Jarðvarmi decided to exercise this right and acquire the stake at the same price as had been agreed upon in those transactions.
The advisors to Jarðvarmi in these transactions were Arctica Finance, SKR Legal Services, and Advel Attorneys.
Ancala Partners is a British investment management firm specializing in European infrastructure investments. The firm possesses extensive expertise in the ownership and operation of energy companies.
These transactions create long-term stability for the ownership of HS Orka. Ancala’s expertise in renewable energy and our shared vision for the long-term opportunities available to HS Orka make them an ideal co-owner. Exciting opportunities lie ahead for the further development of HS Orka. Furthermore, the Blue Lagoon is a cornerstone of the Icelandic tourism industry that has built a strong international brand. The development of recent years creates opportunities for even further growth, which the owners of Blávarmi intend to fully participate in.
We are pleased to partner with Jarðvarmi on the investment in HS Orka. In the operation of HS Orka, Ancala and Jarðvarmi share a common philosophy that emphasizes support for management, further investment, and long-term collaboration. HS Orka provides an ideal foundation for working on further projects in the interesting field of renewable energy in Iceland. We look forward to working with Jarðvarmi and the management of HS Orka.
It is a welcome development that the sales process has concluded. The company will be owned by two strong and reliable shareholders who have clear plans to support it and its long-term development. Jarðvarmi has been a shareholder in the company since 2011 and has provided excellent support. We look forward to working with the shareholders on the continued development and operation of the company. Furthermore, these transactions are a positive testament to the company’s progress and the excellent work performed by our skilled staff.
HS Orka is the third-largest energy company in the country, accounting for approximately 8% of electricity production. The company owns and operates two geothermal power plants, in Svartsengi and on the Reykjanes Peninsula. The company’s electricity production reached a historic high in 2018, with a total production of 1,397 GWh, which was approximately 2.1% above the annual forecast and 21.4% higher than production in 2017.
The company’s operating revenue in 2018 was 8.9 billion ISK, compared to 7.5 billion ISK in 2017. This represents an 18% year-on-year increase, which is primarily explained by increased revenue from electricity sales, which accounted for 85.8% of the company’s revenue in 2018. HS Orka’s EBITDA for 2018 was 3.2 billion ISK, compared to 2.2 billion ISK in 2017.
