Navigat, the gas-to-power group, is set to announce $21 million in investments from Indonesian investors to expand its network of power generators across Southeast Asia.
The investors in the Jakarta-headquartered company are financial services firm Mahanusa Capital and conglomerate Gunung Sewu Group. Their expected pledges follows a $25 million investment in Navigat by the private equity arm of Standard Chartered in December last year.
As with Standard Chartered’s investment, the new capital will go towards enabling Navigat’s power-generating business MAXpower to hit its target of 1,000MW of installed operating capacity by the end of 2015. Navigate specialises in generating electricity from many small energy sources, so-called distributed power generation, as opposed to large centralised power facilities.
“Demand for electricity in remote and inaccessible areas of Indonesia is vast and growing very quickly. Few companies have the expertise, scale and ambition to really meet this demand,” said Mahanusa Capital’s founding partner Daniel Budiman.
Increased access to power is boosting economic development across the region.
Developing countries are turning to more distributed power sources to improve access to electricity in remote areas with poor or non-existent electricity grids and to ensure they have emergency power in the event of natural disasters and other unplanned outages. According to a white paper by US conglomerate General Electric, distributed power will grow 40% faster than global electricity demand between now and 2020.
More broadly speaking, the Asian Development Bank (ADB) estimates Asean's infrastructure projects will require sustained annual investments of approximately $60 billion from 2010 to 2020, in addition to national projects with significant cross-border impacts such as airports, seaports and roads to borders. HSBC estimates demand for electricity in Asia as a whole could top $5 trillion in the next decade.
Not surprisingly the ADB is promoting private sector participation including public-private partnerships (PPP) although the subject of PPP remains a moot point as few countries have attracted long-term yield-seeking sovereign, pension or insurance funds. Most governments still rely on a combination of annual budget, state-owned enterprise revenues, debt and dedicated infrastructure funds.
Following the investment, Mahanusa Capital’s Budiman will join Navigat’s board of directors.
Navigat has been active in the debt markets, raising $270 million last year in deals arranged by Standard Chartered and OCBC.
It has also been expanding across Asia. Navigat earlier this year said that it had completed a $4 million natural gas-fired power plant on Indonesia’s Bintan island and became the first fully foreign firm to agree a long-term power purchasing deal with the Myanmar’s government.
Navigat develops, owns and operates power plants in Thailand and Myanmar as well as in Indonesia. It is also a distributor for General Electric gas engines in Southeast Asia.
