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React Energy Talks to Biomass Developers on Possible Acquisition

April 7 (Bloomberg) -- React Energy Plc, a developer of clean-energy facilities in the U.K. and Ireland, is talking with biomass companies about a possible acquisition.

“We intend to be a consolidator in the industry so we’re talking to a number of other developers for another bolt-on acquisition,” Gerry Madden, chief executive officer of Cork, Ireland-based React, said in London. “A lot of these are developers that have got to a certain stage with permitting their projects and they need to get over the hurdle of funding them and they recognize our relationship with funders.”

Foresight Group LLP said in June it would help finance a React biomass facility in London. RBS also has funded projects developed by React. The developer last month bought GG Eco Solutions Ltd., a producer of wood-powered biomass heat plants, for 2.3 million pounds ($3.8 million) to expand in Britain’s bioenergy market.

React, formerly known as Kedco Plc, expects to bring five biomass and onshore wind projects into operation by year-end. Its assets currently total 166 megawatts and it plans to grow that to 300 megawatts in three years, targeting returns of about 15 percent from the projects.

“We will see funds move into the biomass space over the coming months, particularly on the biomass heating side,” Madden said. “Investors are starting to recognize the returns here backed by long-term heat-supply agreements with blue-chip entities.” Of the renewable energy-focused funds that have listed in London over recent months, none have specifically targeted biomass.

An acquisition of another developer will likely happen over the next year and it would be a share-for-share purchase, the CEO said.

To contact the reporter on this story: Louise Downing in London at ldowning4@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Tony Barrett, Ana Monteiro

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