Gintech Energy Corporation announced on July 20th that it has come to a strategic partnership and private placement agreement with Tongwei Group. This agreement allows Gintech Energy and Tongwei Group to expand the solar business globally. Under the agreement, Gintech Energy will offer 50 million shares to Tongwei Group. The total consideration will be NT$850 million in cash at NT$17 per share. After the placement, Tongwei Group will own approximately 10% of Gintech Energy.
Focusing its two core business on agriculture and new energy, Tongwei Group is a major technologically advanced private enterprise. The Tongwei Group operates nationwide in China as well as in Southeast Asia with over 130 branch/subsidiary companies and approximately 20,000 employees. Tongwei Co., Ltd., a large listed agricultural company controlled by Tongwei Group, is the world’s largest aqua feed manufacturer as well as major livestock poultry feed producer. Meanwhile, Tongwei Group strives to strengthen its competitiveness through huge investments in the polycrystalline silicon and solar PV industry. Tongwei New Energy focuses on the investment and the operation of downstream PV systems in the solar industry. It’s currently building over 200MW in “Fisheries & PV Integration Project”, “Agriculture + PV Complementation Project”, and roof-top power station projects in rural areas, etc.
Tongwei Solar, controlled by Tongwei Group, currently has a 2.3GW solar cell capacity, ranked as the 3rd largest solar cell producer in the world. With Gintech Energy’s 1.8GW solar cell capacity, the combined capacity of 4GW will make it the number one in the world. Furthermore, with the potential buildup of 1GW of solar cell capacity and 450MW of solar module capacity at Gintech (Thailand), the group’s solar cell capacity will even surpass 5GW. Tongwei Group and Gintech Energy will jointly support Gintech (Thailand) to become the leading solar player in Southeast Asia and deepen their footprint in the module business. Following the One Belt One Road strategy promoted by China, the group will further expand development in the Southeast Asia market.
More importantly, Tongwei Group has been promoting a “Fisheries & PV Integration” strategy. Among the 500 million mu of aqua culture water space in China, Tongwei Group controls approximately 10%, which can accommodate 100-150GW solar systems. Besides, Tongwei Group will utilize its 15,000 sales network for aquatic feed products to promote family distributed PV power generation systems in China-wide villages and counties. This expands its product channels and increases its asset value with 10-15% IRR target. In the long run, Tongwei Group plans to build 5GW large scale PV power generation plants in Sichuan and the whole country. Unlike other Taiwan peers who invest in solar cell production capacity in China, Gintech Energy will directly step into the enormous downstream system market in China with Tongwei Group’s massive demand for PV generation and it will largely improve its business outlook in the mid to long term.
“We are honored to be the first Taiwanese solar supplier to strategically cooperate with the Chinese leading solar company. By utilizing Tongwei Group’s strength and leadership in China’s new energy business, we are further penetrating into the Chinese market,” commented by Dr. Wen-Whe Pan, President and Chief Operation Officer of Gintech Energy. “As China has dominates the demand for PV products, we believe this alliance will enhance our industry status and directly benefit from the eager demand for clean energy in China. We expect to step forward in terms of market share and profitability with the strategic partnership.”