Clifford Chance

Clifford Chance advises CDPQ on landmark US$2.7 billion acquisition and holdco financing in Taiwan’s offshore wind farm

Leading international law firm Clifford Chance has advised global investment group Caisse de dépôt et placement du Québec (CDPQ) on the approximately US$2.7 billion co-investment in the Greater Changhua 1 offshore wind farm and associated holdco financing. This transaction marks the first time holdco financing, which is more common in Europe’s offshore wind market, is deployed in Asia Pacific’s offshore wind market.

In December 2020, CDPQ, together with minority local investor Cathay PE, entered into a share purchase agreement to acquire 50% of Greater Changhua 1 from Ørsted, a leading Danish multinational power company. Ørsted will continue to own the remaining 50%, while also contracting with the project company to construct and operate the project.

The 50-50 partnership is the first of its kind in the Asia Pacific offshore wind sector. It also represents CDPQ’s first direct investment in Taiwan through its Infrastructure team, which has a long track-record in the renewable energy sector.

Upon approval of the investment by Taiwanese authorities, completion of the share sale and financial close under the holdco financing occurred in early November 2021. Proceeds of the holdco financing are used by the investors to pay the consideration for the share purchase and fund their portion of construction and development costs.

The funding was provided to Mercury Taiwan Holdings (CDPQ and Cathay PE's joint investment vehicle) by 17 international and Taiwanese commercial banks and life insurers, along with Export Development Canada (participating in its first offshore wind financing in Taiwan). The commercial banks and life insurers benefit for a portion of the financing cover from EKF, K-SURE, Atradius and UK Export Finance.

The 605MW offshore wind farm, which is located off the coast of Changhua County in Taiwan, will be supplying clean power to over 650,000 Taiwanese families. Construction is underway and is scheduled to be completed in 2022.

The Clifford Chance team was led by partner Ross Howard (Singapore), supported by lead associates Jordan Knowles (Singapore), Dominik Kepinski (Perth) and Swati Gupta (Perth). Corporate team was led by partner Valerie Kong (Singapore). Senior associates Leonhard Rudolph (London) and Irina Steinberg (London) advised on the construction and operations aspects of the project. Partner Paul Landless (Singapore), together with counsel Miles Binney (Singapore) and senior associate Mae Yen Teoh (Singapore) advised on hedging matters.

Ross commented, “We are delighted to have advised CDPQ on this strategically important investment.  Following on from the market-shaping Formosa 1 and Formosa 2 projects, we have once again demonstrated our ability to take products and approaches previously only used in the European offshore wind market and adapt them to local requirements.  It feels very appropriate that we should have reached completion during COP26 – we look forward to continuing to operate at the forefront of market developments as the energy transition gathers pace.”

Clifford Chance regularly advises on market-leading renewables and energy transition transactions around the world including the world's first commercial scale carbon dioxide direct air capture (DAC) project, financing for Vietnam's largest single operating solar power plant, Taiwan's landmark Formosa 1 and Formosa 2 offshore wind farms, OTPP's US$1.25 billion investment in renewable energy developer Equis, Iberdrola on its Swedish offshore wind partnership and entry into the Japan offshore wind market, and Blue Elephant Energy's acquisition and financing of four photovoltaic parks in the Netherlands.