Hydro Tasmania explores joint venture to grow Entura business
August 17, 2015
Hydro Tasmania is exploring the potential of a joint venture with PowerChina to expand the market access of its consulting engineering business Entura.
Entura signed a Memorandum of Understanding (MOU) with PowerChina subsidiary HydroChina during the Chinese President’s visit to Tasmania in November last year, building on the state’s growing relationship with China. PowerChina is a Chinese Central Government enterprise and ranks 313 among the Fortune Global 500.
The Entura / HydroChina MOU focused on co-operation on the development of opportunities in the energy and water sectors, including hydropower and renewable energy, sustainability and environmental management and power transmission.
Earlier this month, Entura and HydroChina jointly won a bid to work on the Kidston Pumped Storage Hydropower Project in North Queensland, for Genex Power.
“The project was awarded based on the combined capability of the two businesses, and demonstrates how the two businesses can leverage their relationship for mutual benefit,” said Hydro Tasmania CEO Steve Davy.
“In particular, Entura brings its Australian experience to the project and will help identify opportunities for project optimisation, while HydroChina brings a wealth of experience in the development and construction of pumped storage projects.”
Entura is already one of the world’s most experienced specialist power and water consulting firms with a significant number of clients, and a strong reputation in both the Australian and global markets. It offers services that are highly valued by clients.
“The potential joint venture would accelerate Entura’s growth by providing access to a significant project work load for the JV partners, and access to new markets through the broader international presence of the HydroChina/PowerChina group,” said Mr Davy.
“This growth would also provide improved opportunities for Entura’s people.
“Discussions are at an early stage with no firm decisions being made by either party. At this stage, we are having discussions about the strategic and cultural fit of our businesses.”
Subject to Board approval to proceed to the next stage, Hydro Tasmania will continue discussions, with a view to signing a high-level agreement in coming months about how the joint venture might be formed and operate. Following further assessment, negotiations would continue, with the aim of reaching a formal agreement by the end of 2015.
Entura’s employees were briefed about the potential joint venture this afternoon. Consultation with employees will continue, to understand their views on the joint venture opportunity, and these will be part of input into the high-level agreement to be signed later this year.
About the potential joint venture partners
HydroChina and PowerChina Huadong are part of the PowerChina Group.
HydroChina is a subsidiary of PowerChina and is acting as the facilitator within the PowerChina Group for the proposed relationship with Hydro Tasmania. HydroChina provides comprehensive technical services with respect to hydropower and water conservation, and renewable energy development. It engages in site planning, investigation and design, construction and supervision and EPC general contracting. It also has a mandate for investment in hydropower and broader renewable energy projects internationally. In 2014, HydroChina was ranked No. 12 in the top 150 Global Design Firms by annual revenue.
PowerChina Huadong, based in Hangzhou near Shanghai, is a large player in the water and power sector in China and internationally. Traditionally a consulting business within China it has expanded to deliver engineering, procurement and construction (EPC) services and invest directly in projects, in addition to expanding its markets internationally.
Key facts and figures on PowerChina Huadong:
- Largest “Design Institute” in the PowerChina Group.
- Approximately 4000 employees, predominantly engineers
- Total assets $US1.3 billion, total revenue $US0.9 billion, EBITDA $US97 million (2014)
- Key markets: Domestic (China); International (South East Asia, South Asia, East Africa, West Africa, Middle East, Latin America)
- Three key segments: Hydropower and Renewables; Urban and Infrastructure; Dam Safety
- Three key products: Design/consultancy; EPC; Investment