The 145-year-company looking to partnerships, deals overseas to rapidly grow its green portfolio of solar, wind and hydro projects. n the sidelines of a conference panel on sustainability, , chairman of storied B. Grimm group, methodically describes the rapid repositioning of one of Thailand’s oldest companies for a low-carbon future: After three decades of firm footing in Thailand’s power business, B.
Grimm is embarking on a massive expansion drive to capture growth opportunities in renewable energy outside its home turf. The third-generation head is looking overseas to double the renewable projects in its portfolio, including wind, solar and hydro, to 50% of its power capacity. That’s part of an ambitious 70 billion baht ($2 billion) plan to boost listed flagship B.
Grimm Power’s total generating capacity to 10,000 megawatts (MW) by 2030 from a current 3,830MW. “I’m 99% convinced that we can do that,” the 68-year-old says in Singapore in September, of his blueprint to deliver on profit and sustainability alongside a goal of net zero carbon emissions by 2050 (where the amount of greenhouse gas emissions produced is balanced by a reduction in emissions). “The 1% you don’t always know exactly what’s going to happen.
” It’s the biggest capital spend in the Bangkok-based group’s 145-year-history, which spans the early days of trade in Siam (now Thailand), two world wars and six Thai kings. And it’s a big bet. Stiff competition in the local power market provides limited room for growth—B.
Grimm Power ranks fifth by capacity among the country’s private power producers, all of whom are revving up their green energy output as Thailand targets getting 40% of its power from renewables by 2036. At the same time, the market is heating up in Asia and elsewhere as demand for reliable and clean energy surges alongside a proliferation in public and private sector decarbonization targets. For Link, the shift to cleaner and greener energy production is the only way forward, reducing B.
Grimm Power’s reliance on gas-fired power plants, which currently generate about 73% of its operating capacity. “We used to have a vision to be a world-class energy company. When we achieved [that] we had a new vision to empower the world compassionately,” he says of corporate goals aligned with climate-action commitments.
Renewables will drive industry growth on a large scale, B. Grimm Power noted in a January investor presentation outlining its “Green Leap” strategy. That’s expected to fuel a 10% increase in Ebitda, on a compound annual basis, to 35 billion baht by 2030 from 15 billion baht in 2021.
Bo Thong Wind Farm in northeast Thailand adds 16 megawatts of capacity. “It’s easy to say by 2030 we’ll have this and this, and by 2050 we’ll have that. But if you have an implementation plan, then you can make it happen,” Link says.
He sees the most opportunity in rapidly growing and fast-transitioning economies outside of Thailand, where the company can be green from the start. Currently the bulk of B. Grimm Power’s generated power goes to the Electricity Generating Authority of Thailand, which operates the country’s transmission grid, with global sales making up less than 10% of revenue.
But recent years have seen a spate of partnerships and deals in Asia, the Middle East and Europe (the company has earmarked as much as 7 billion baht for renewable investments there) with a focus on solar energy. Among them, B. Grimm Power in October acquired Italian solar company LT06 to bring its renewable capacity under development in the country close to 300MW.
Two years ago it purchased a 90% stake in Visa Max Solar, which is developing a 14MW wind farm in Poland. Closer to home, in April, a 45%-owned subsidiary bought two solar projects with 90MW of total installed capacity in Malaysia. B.
Grimm has also been expanding its renewable energy portfolio in South Korea, its biggest market by capacity to date outside of Thailand. Its purchase of a 21% stake in 99MW solar project Saemangeum Sebit Power, which supplies electricity to state-run utility Korea Electric Power Corp. (Kepco), in May followed its 5.
3-billion-won ($4. 1 million) investment last year to buy stakes, ranging from 15% to 70%, in four separate wind farms in Korea with a combined 955MW of capacity, for which it has secured grid connection deals with Kepco. B.
Grimm is no stranger to Korea’s major power player. In 2020, it brought in Kepco, known for its energy storage and management systems, as a partner when it won the bid to produce electricity for Thailand’s U-Tapao International Airport. “By inviting them to join us, they invited us to join them,” Link says.
. Grimm seeks hands-on involvement in its energy assets, but not necessarily as the majority shareholder—a formula it hopes to replicate from present tie-ups. “We try to provide something which worldwide partners find beneficial for them,” Link says.
The company currently has wind, solar and hydro projects across 16 countries, mostly in Asia, where household and industrial demands are expected to power 9% CAGR growth in the renewable energy market over the next five years, according to Mordor Intelligence. “We don’t want to be the foreigner who comes in, puts our foot on the ground and then takes the money back. We would like to be an integral part of that country,” says Link, a Thai citizen who speaks Thai fluently.
He adds, “One thing which is very important for us and me personally, is we always like to build capacity. Building something from scratch so that we can contribute to every single part of the process in building a power plant. ” Of its current pipeline, almost all are greenfield projects.
That could put a strain on cash flow. “The most crucial challenge for B. Grimm Power is funding,” says Wisuwat Yaikwawong, a Bangkok-based energy analyst at Krungsri Securities by phone.
“The company will have to design the right financing structure and expansion pace to achieve its ambitious target while keeping debt at appropriate levels. ” A key challenge is capital management, particularly on gearing, agrees Natchaphon Rodjanarowan, a Bangkok-based analyst at Maybank Securities. As of end-September, B.
Grimm’s net debt to equity stood at roughly 1. 5, on par with industry peers. However, Natchaphon adds the company’s planned investment in South Korea could drive the ratio to 2.
8 in 2026. Nam Che Hydro Power with electricity capacity of 115 MW in Xaisomboun, Laos. Link says the company is exploring strategies to secure an array of funding sources.
“We have nearly 70% of the shares [of B. Grimm Power]. We would like to find a way where we don’t have to increase capital,” he says.
“We do a lot with vendor financing. We do a lot with partnership, that’s where partners come in, on financing. ” Other options include green bonds.
In 2018, B. Grimm Power became the first company in Thailand outside the financial sector to embrace the fixed-income instrument, issuing 5 billion baht in green bonds to fund renewable power projects. It’s since offered another 6.
3 billion baht of green debt. The company has also tapped perpetual bonds—a bond that offers regular interest payments with no maturity date—issuing 8 billion baht of the debt in March. That brought its net gearing down to 1.
47 at end-March from 1. 98 at the end of 2022. Also on the table are infrastructure and other mutual funds as well as subsidiary listings, the company says.
“We believe B. Grimm’s expansion will be funded primarily by cash on hand and cash flows from operations. Beyond that, there are many alternatives the company can consider and perpetual bond is one option that can accommodate its growth aspirations while keeping its debt-equity ratio in check,” says Sukit Udomsirikul, chief research officer at InnovestX Securities in Bangkok.
As of end-September 2023, B. Grimm Power had cash reserves totaling 29 billion baht. In the first nine months of this year, B.
Grimm Power’s earnings turned positive at 1. 4 billion baht, on 44 billion baht in revenue, as natural gas prices stabilized, following a net loss for 2022 on increased fuel costs at its gas-fired power plants. Yet it wasn’t enough to offset investor concern over profitability and uncertainty over the energy policy of the new Thai government, which in September pledged to reduce the energy tariff to cut electricity bills for households and businesses.
Shares have tumbled some 30% year to date. Looking ahead, Siriluck Pinthusoonthorn, a Bangkok-based analyst at Beyond Securities, wrote in a November report that while net profit is expected to weaken in the fourth quarter on the government’s price cut, the company should see strong growth in 2024, in part from increased capacity of recently completed projects. Guest of honour, HRH Princess Maha Chakri Sirindhorn at a celebration marking B.
Grimm’s 145th anniversary at Wat Arun Ratchawararam in Bangkok. he B. Grimm story began in 1878 when German pharmacist Bernhard Grimm and his Austrian partner, Erwin Mueller, opened a chemist’s shop called Siam Dispensary off Bangkok’s New Road.
The shop prospered and the owners expanded to other businesses. Harald’s grandfather Adolf Link, an ambitious young pharmacist from Luebeck, Germany, hired to help grow the company, bought out the founders when they retired in 1914. Tumultuous decades followed that saw the company’s assets seized on British orders during WWI, and Adolf and his family sent to concentration camps in India.
After the war, he re-established the business, building new offices in central Bangkok on property owned by the royal family. With the outbreak of WWII, Adolf relocated to Germany as Thailand’s honorary consul, then restarted the company in 1949 with son Herbert in charge of the Bangkok store. His brother and partner, Gerhard (Harald’s father), remained in Germany to build the firm’s presence in Europe.
By 1964, B. Grimm’s portfolio under the brothers’ stewardship also included engineering and equipment for healthcare, telecoms and air conditioning. After graduating with an M.
B. A. from Switzerland’s University of St.
Gallen, Harald Link—who grew up in Germany and Switzerland—moved to Bangkok in 1978 to help his uncle manage the business. Within the decade he was helming the group. “I arrived here at a time before globalization was changing the world.
The infrastructure in Thailand was also changing, which allowed the company to expand more into the manufacturing and infrastructure side,” says Link on the company’s website. He entered Thailand’s emerging private power generation industry in 1993 with B. Grimm Power as its investment arm, taking it public in 2017.
Today the power business makes up about 70% of group revenue (undisclosed), followed by its building-related businesses and pharmaceuticals. The SET-listed power company also makes up the bulk of Link’s wealth, estimated at $1. 6 billion in early December.
He’s been preparing his daughter Caroline, 41, for the top job at the group, though there’s no firm timeline for the handover. Caroline studied international business at the European Business School Madrid, and among other jobs worked at pharmaceutical firm Merck (Thailand) in marketing before joining B. Grimm in 2008 as the head of corporate communications.
She’s currently a board director at B. Grimm Power in addition to sitting on the boards of dozens of group companies. “She understands every single one of our businesses,” Link says.
His son, Felix, has been a director at B. Grimm Power for the past two years. Harald says of the 40-year-old, whose board profile lists his long stays at monasteries and retreat centers: “He has a very good economic mind … but his interest does not lie mainly in running companies.
He mainly wants to do a spiritual thing. ” “I don’t want to be an executive forever,” Link adds. “So, I have to make sure that we have a good succession system, which I have strongly concentrated on in the last few years.
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From: forbes
URL: https://www.forbes.com/sites/phisanuphromchanya/2023/12/05/how-bgrimm-head-harald-link-is-investing-heavily-on-renewable-energy-as-part-of-a-2-billion-plan-to-deliver-exponential-and-sustainable-growth/
