Investment Opportunity in Laos

Small Hydropower
Context

• Hydropower is a strategic sector in the Lao economy

• Larger projects have traditionally been the focus

• 200 Projects (cumulatively > 1000MW) of small projects are stalled and
undervalued

Opportunity

• Increasing sophistication and regulation of the sector is facilitating greater

foreign investment in the sector

• Established infrastructure and and international network of hydro experts is

available and in place

• Strong financial backing needed to capitalise on “fire sales” of assets

Expected Returns

• Consolidation or clustering of assets can help realise the industry benchmark

IRR of 14%

• Opportunity exist for early exits (post Feasibility Study, pre construction) at 2.5 x
investment multiple (if invest as a consolidated fund structure - Option1)

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Methodology and Exit Strategies

3 strategies for investment are proposed:

Title Decription Approximate Pros Cons

Commitment

1 JV Fund / JV under an USD 3-25m

Ability to leverage on High Upfront
SPAC umbrella streamlined commitment
Structure consortium to Scalable administration and
acquire suites of depending on incorporation costs
assets investment across a suite of
appetite projects

Leverage on experts
database, local
knowledge and IPs

More granular
investment approach
with IPO upside

2 JV on JV on a project- USD 2-16m

Lower cost of entry Limited economies
Specific by-project basis, of scale & scope
Asset Basis team to acquire 1st asset
single asset deployment
(NC2)

3 Agency / Engage technical Lower entry risk

Need for investor
Consultation consultants to Agency fees and side management
Engagement shortlist and Consultation Ability to tailor specific and inputs +
target specific retainer investment needs consultation
assets on behalf
of Investor

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Option 1. JV Fund / SPAC Structure

Initial Investment of USD3m + commitment on fund size

Potential Fund size up to USD 50m depending on investment appetite

Target Hurdle IRR at 14% (set as industry benchmark)

Potential divestments prior to construction at ~ 2.5 x multiple (if necessary)

Target Exit - IPO

Commitment of funds
JV agreement to co- Establishment
develop select assets of Holding
(multiple) SPV or SPAC
Injection of initial funds

Schedule of deployment
SPV(s) Acquisition
established Transactions
Sourcing & Selection of Suite of Assets

SHC-1
Development & Construction
of Individual Projects / EPC
SHC-2

Post FS / Pre-
construction
Exits

COD-1 Dividends

COD-2 Dividends IPO

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Option 2. JV on Specific Asset Basis (NC2)

Initial Investment of USD2m to buy into project & capitalise the SPV

Total construction cost (NC2, 8.4MW) approximately USD16m

Final investment depends on level of financing sought (if any)

Project IRR between 12 - 15% (NC2, 5.2MW)

Standard hydropower concessions in Laos are 25-30 year tenures


Decision on Equity Sharing

JV agreement
JV heads of
to co-develop
agreement
asset 1 Injection of capital funds

Incorporation Filings

PPA Formalization

Incorporation
of SPV

Detailed Design

Construction &
Build

COD achieved Dividends

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Option 3. Agency and Consultation Engagement for Asset Sourcing

Opportunity to shortlist assets and tailor to specific investment strategies

LJHC will act as agent on behalf of investor to source projects direct from
project owners

LJHC will provide full support services through to acquisition, and can be
engaged for detailed design and project management through construction
phases


Shortlisting of Potentials Engagement

Agency or
with local
Consultation
Project
Agreement Pathfinding Promoters

Commercialisation Terms of Reference Formalisation

Incorporation of offers to
of SPV incumbent
Legal Incorporation promoters

Construction & Detailed Design Services

Build

Operation & Support Services

COD achieved Repatriation of Dividends

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Appendix 1 - Short listed projects (Priority of
development)

COMPARISON OF ASSETS CLASSES

ASSET PARAMETERS
Transmissi Total Head Catchment Ave Mean Type of
on Line Area Flow Scheme
CA MW Km m Km2 m3/s

1 Nam Chat 5.2 3Km 94.4 270 6.21 Run of

(22kV) River
2 Nam Vang 15 under 280 137 6.3 High Head
study
under Run of
3 Nam Hang 9 100-125 241 9.6
study River
4 Nam Neun 4 10 under 30 1618 37.8 Dam
study Storage
5 Nam Khan Cluster 10 under 12-30 940-985 27 Run of
study River
6 Nam Ngao 10 28Km 70 311 4.35 Run of
(115kV) River
7 Nam Tep Cluster 98 29Km 256 348 - 556 26.13 - Run of
(115kV) 46.73 River
8 Nam Kien Cluster 26 29km 491.5 66 27.03 Run of
(115kV) River
183.2

**Proposed first deployment, Nam Chat (NC2) can be optimised to 8.4MW

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Appendix 2 - Parameters for Proposed Project 1 NC2

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Appendix 3 - Financial Modelling NC2 (5.2MW)

• Modelling based on 70% financing @ 6% interest,15 year repayment

• IRR of 12.15% is considered conservative, and can be further optimised


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Appendix 4 - General protocols for hydropower
development (Lao PDR)

Stages of Development

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