Acquisition of SAG Solarstrom: Not a bad deal for Shunfeng

pv magazine: Shunfeng has now bought the insolvent SAG Solarstrom through its German subsidiary Suntech Deutschland GmbH for €65 million. How would you rate the deal and who benefits the most from it?

Götz Fischbeck: First and foremost SAG Solarstrom’s creditors benefit since they are achieving a relatively high insolvency dividend. Of course, SAG’s employees, who are being taken over, also benefit, as do SAG’s customers, who will retain their business partner. Shunfeng Photovoltaic has not made a bad deal. Although it’s difficult to judge how appropriate the €65 million price is without a thorough due diligence and exact knowledge of the contract details, the 28 MW of solar farms that belong to SAG Solarstrom as well as its Meteocontrol subsidiary, which operates solar plants with a total capacity of 8.5 GW, represent significant value.

Was Shunfeng Photovoltaic mainly interested in those assets or is was SAG Solarstrom’s know-how also a major reason for the takeover?

The knowledge gained by this acquisition is significant for Shunfeng. Shunfeng is planning to construct several gigawatts of solar farms in the coming years which it will own and operate. SAG Solarstrom’s know-how and technical solutions in the area of photovoltaic system design and installation as well as operation and performance monitoring of solar farms are especially valuable for Shunfeng. How advantageous the acquisition of SAG Solarstrom is for Shunfeng in the end, from an economic point of view, will depend a lot on which ongoing obligations and risks from the project business the new owner has taken over and how successful SAG Solarstrom is integrated in the Shunfeng group.

Shunfeng has been on a massive shopping spree for the past several months, including the acquisitions of Wuxi Suntech and Sunways’ inverter business. The company is also planning to massively expand its project business worldwide. Who is behind the company and where does Shunfeng have the financial means for its business expansion?

There is comparatively little information available about the main shareholder of Shunfeng Photovoltaics, Zheng Jianming, who is also under the name of Cheng Kin Ming in Cantonese. He is regarded as a billionaire who has acquired his wealth mainly through real estate transactions in China and Hong Kong. His wealth and his good relations with leading Chinese banks are certainly to thank that Shunfeng has sufficient credit. Just last month, the company announced that it had secured a CNY 20 billion credit line from China Minsheng Banking Corporation. This financing, however, is most likely intended for the project business rather than for further acquisitions.

Do you expect further acquisitions by Shunfeng in Germany and Europe in the coming months?

As the CEO of Wuxi Suntech, Eric Luo — who also belongs to Shunfeng’s board of directors – explained in an interview with pv magazine in the early summer of this year, the intention is to develop the group into an integrated company in the field of renewable energies. To that end, Shunfeng will not be limited to photovoltaics but will also invest in the areas of storage technologies, biomass power plants and other renewable energy sources. Further acquisitions are therefore certainly to be expected in the future and not only in Germany and Europe.

Is Shunfeng likely to maintain the pace of acquisitions that it has exhibited in recent months?

I doubt that it will maintain the pace of its portfolio expansion in the future that it has had the past twelve months. The many investments from the recent past must first be integrated and in some cases restructured. The necessary resources, especially with regard to management, should not be underestimated, otherwise the expected synergies will quickly prove to be too optimistic.