Sunly becomes an independent power producer, after completing its merger process
Sunly has completed the merger process initiated in 2021 becoming an independent power producer, supplying the Baltics & Poland with renewable energy. The parent company is now Sunly AS, after the asset company Sunly Land AS merged with the management company Sunly OÜ. What are the reasons behind this change and possible impacts on various stakeholders? Learn more from the interview with Priit Lepasepp – the CEO of Sunly.
When Sunly was established in 2018, it initially operated as two separate groups – the assets group, established by former 4Energia minority investors, and the management group, established by Priit Lepasepp, Martin Kruus and Kalle Kiigske. Now, the companies were combined to form an Independent Power Producer, containing both assets and people. Priit, could you please explain this change?
Although Sunly was established based on the belief that renewable energy growth is coming, we did not foresee such rapid growth and the energy crises of the 2021/2022. The company has developed more rapidly than expected and we are ready to in invest heavily into new renewable projects. Therefore, to bring the supply of renewable energy security to Poland and the Baltics, Sunly needs to attract more investors and not only investors, but also additional employees. So, this was the main reason – to simplify the structure, as well as preparing ourselves for an IPO in the future.
What changes? Any impact on employees or investors or partners?
The main change is that, before the merger, Sunly’s assets and people were in different groups of companies. Now, the assets are in the same group with the people who are developing our projects. This makes the whole structure more understandable for everybody, including for our employees who are not working anymore for the management company that provides services to certain legal entities, but for an independent power producer company.
What kind of advantages do you see this change bringing to shareholders?
We have promised our existing shareholders that we will carry out the merger by the beginning of this year. So, I think for them it makes things easier. Namely, they will now know that they are not only owning the assets or development pipeline, but can be assured that the people, who deliver and take care of these assets and pipeline, are included in the company as well.
Sunly has a head office in Tallinn but also has offices in Latvia, Lithuania, and Poland. How and if will this change affect them?
In those countries, we are keeping the legal entities as they are. But the ownership will be clearer and impacts are similar.
Sunly still has many legal entities. Why is this?
It is very common to have so many legal entities in the renewables industry. Each project is basically one legal entity (an SPV) during the development phase. If you have lots of solar parks constructed at a similar time, you try to group them together in portfolios. However, for early-stage development, you need many legal entities because you don’t know the exact time when you start construction. Additionally, SPVs generally only include assets, so Sunly needs to have a separate legal entity in every country, which employs our people.
Sunly is looking to raise 100-150 mEUR by this June. What kind of investors are you looking for?
We welcome investors who believe in what we are doing and how we are doing it. Even though Sunly is a young company, our team has a long and strong track record. We have built power plants and developed quite a significant pipeline in a short period of time. Our mission is to help provide renewable energy security to Estonia, Latvia, Lithuania, and Poland. This is much needed today where the energy architecture is changing in Europe on daily basis and solar energy, storage and wind power are the most deployable technologies.
We are looking for investors especially in the region we are operating – Poland and the Baltics. Unfortunately, there are not many developed projects in this area which can be deployed in rapid pace to help to solve the energy crisis in EU. Therefore, the countries are having a hard time in achieving the EU’s Fit for 55 targets for climate and energy. To solve this situation, we need people and we capital to finance the development of new projects. It used to be so that large companies bought projects that were already fully developed by small entrepreneurs. We do things a little bit differently than others. Namely, Sunly is developing renewables from the scratch – starting from the negotiations with landowners up to designing, building and operating the projects. As a result, the full project lifecycle is in our hands. This makes us an independent power producer company and not just a renewable energy developer. So, the new investors we are looking for are those who are ready to join us on this journey.
Let’s talk about the elephant in the room and how the investors’ market has changed. The amount of money Sunly is planning to raise is impressive! Could you describe how it feels when you have such a big responsibility to manage such big amounts of money?
True, if you manage somebody else’s money or investments, you must do it with the highest care and diligence. This means we want to be as transparent as possible with our investors and co-operation partners. Sunly’s management are also investors themselves, so we share risks with other investors. I think it does not matter how much money is involved – the care should always be the same.
Our core team comes from a company which has a long track record with professional investors in this region. The main investors in our previous company were the Norwegian municipality-owned energy company Vardar, as well as the international financial institutions EBRD and NEFCO (the latter is a subsidiary of Nordic Investment Bank). Therefore, we have experience in working with professional investors with the highest standard of corporate governance.
How do you prove your value to investors? How can you assure the investors that their money will be earned back in the most successful way?
This isn’t our first rodeo! J We have previously built a successful company – Nelja Energia – and sold it when it was the largest renewable energy producer in the Baltic States. With the same team and quality, we are now building new assets.
Additionally, our transparency on how we work is above the market standard. Furthermore, the key to doing things even better than in the past is having the best people, building on the previous experiences, and adapting to new things quickly. So, we are constantly growing and not just for the investors, but also for our partners and our employees.
Fortunately, there are lots of enthusiastic Sunly fans on our team, who really believe in what they are doing. Combined with the team’s track record and with our current investors, who are also fans of renewables, this is a combo of three key pillars that we are offering.
Behind all this is the story of success and failures from the past, which helps us better prepare for the future. I never say that we will succeed 100%. What I say is that we will do our best to increase the likelihood of success. So, this is what we sell – the potential!
During the last capital raise last summer, you had such high interest from investors. Why are potential investors so willing to invest into Sunly?
I think it is because of the proven team. This is the most important thing. We are a team that has the longest and most successful track record in developing wind power in the Baltics. We were the largest wind assets owner in the Baltics in 2018. The market knows us and obviously, there is a certain amount of hope that we will deliver similar growth as before.
If we merely look at the capacities, Sunly will quite soon hit half of the operating capacity that Nelja Energia had. Given that Nelja Energia was established in 2005 and Sunly in 2018, it took us 13 years what we have now done in just 3 years. True, Sunly has been building solar capacity, which is able to produce three times less MWh than wind turbines. But in terms of initiating and delivering production capacities, the difference is quite small.
I also see that investors value how we communicate with them – both existing and potential investors. In fact, we communicate with them all the time. Therefore, they also notice that the figures and plans we showed them half a year ago have increased even over a short period of time. We must be doing something right and this attracts capital and the people who are behind the capital.
Do you have a special message to your employees and investors?
The main message is that we need electricity now and, in the future, and we need it more than before. We could imagine our lives without Bolt, it would be replaced by taxi drivers, but without electricity you could not really imagine your life today. At the same time, we can’t accept anymore that electricity should be produced at the expense of our nature or our energy security.
I really think that in the next decade the renewables will be the most desired field by both the investors and employees. So, I think now is the right time to invest or to start a career in renewables.
We are welcoming investors, who believe in us and would like our team to deliver a growth story. And for our employees, or the potential employees – I can promise that we have very interesting years coming. P.S. Salaries in renewables will be comparable to the IT field. As a CEO of Sunly, I would recommend joining our team as early as you can. Let’s power the future together!