Cosco Capital buys 8.7MW hydroelectric power plant

Cosco Capital [COSCO 4.59, up 0.2%; 226% avgVol] [link] disclosed its purchase of Matuno River Development Corp. (Matuno), the corporate entity that owns and operates the 8.66 MW Matuno River Hydroelectric Power Plant in Bambang, Nueva Vizcaya. COSCO acquired 100% of Matuno’s outstanding shares but did not reveal the per-share price, as it is not under an obligation to reveal the price since the cost of the transaction does not exceed the minimum for price disclosure (>10% of COSCO’s book value). The company said that its acquisition of Matuno is its “opportunity to enter into another profitable business within the renewable energy sector.” COSCO referred to this as a “strategic move” that will “enhance its sustainability profile”.  

MB B: This is COSCO’s second small-scale hydro purchase so far this year. The first was back in March when it bought a controlling 60% stake in an 8MW hydroelectric power plant in Naujan, Oriental Mindoro, for P552 million. For the fun of it, if we assume everything else to be equal, we can estimate that the cost of purchasing 100% of this new 8.66 MW power plant would be approximately P996 million, based on a P115M/MW value. It will be interesting to see if COSCO continues this path of sniping small-scale independent hydro, or if its eyes get bigger and it develops a desire to develop its own renewable energy projects. COSCO’s owner, Lucio Co, strikes me as a “me too me too” type of guy who is comfortable jumping onto whatever bandwagon is popular at the moment. He’s been successful at it (well, not so much his shareholders), and making money isn’t so much about being first as it is about being profitable. Maybe he’s just building a portfolio of potential spin-offs?

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