AES Corporation (AES) concluded its equity sale with a wholly-owned investment subsidiary of China Investment Corporation (CIC). The deal was first announced on Nov 6, 2009 and raises $1.58 billion in new capital for AES. CIC acquired 125.5 million shares of AES common stock for $12.60 each for a 15% stake in the company. 

China Investment’s entry provides AES with a new source of capital to finance its pipeline of investment projects. Additionally, working with CIC will expand its financial sources in Asia, where the majority of growth in electricity demand is projected to occur. 

AES Corporation in its development pipeline has 1,500 MW of wind and solar projects in the U.S. and Europe, as well as 7,500 MW of core power projects under development primarily in Asia and Latin America. 

AES Corporation is highly dependant on external funds for its operations and expansion. The company is highly leveraged, its debt being more than double its equity and translating into a high debt-equity ratio of 2:1, although its long-term debt-to-capitalization is only 67% for fiscal 2009. 

AES Corporation closed fiscal 2009 with cash and cash equivalents of $1.8 billion, short-term investments of $1.6 billion and $1.1 billion available under its long-term non-recourse construction credit facility. Total debt stood at approximately $19.9 billion. Arlington, Virginia-based AES Corporation is a global power company that owns and operates electric power generation and distribution businesses in many countries worldwide. The company’s operations are divided into three segments: Regulated Utilities (combining the former Large Utilities and Growth Distribution), Contract Generation, and Competitive Supply.
By fuel type, AES’s capacity portfolio is approximately 41% coal, 39% gas, 16% hydro and 4% oil. Close to 56% of its total revenue is generated in Latin America with the balance (44%) in North America, Europe, Asia, the Middle East and Africa. Revenue is equally derived from generation and distribution, and almost 80% of generation revenue is under long-term contracts.
Read the full analyst report on “AES”
Zacks Investment Research