Landsvirkjun

Landsbankinn and Landsvirkjun found enterprise for renewable energy production abroad

16. February 2007

HydroKraft Invest is meant to invest in projects outside Iceland that are connected to renewable energy production, with an emphasis on hydropower. Björgólfur Guðmundsson, chairman of the board of Landsbankinn; Sigurjón Þ. Árnason, Landsbankinn CEO; Jóhannes Geir Sigurgeirsson, chairman of the board of Landsvirkjun, and Friðrik Sophusson, managing director of Landsvirkjun, signed the agreement founding the company at a press conference today, Friday, February 16th.

Few of the world's nations possess as much expertise in exploiting renewable energy sources as Iceland: 72% of the country's primary energy consumption is derived from renewable energy sources, compared to a world average of 13%. In founding this company, Landsbankinn and Landsvirkjun intend to join hands for exporting this valuable knowledge.

HydroKraft Invest is intended to lead improvement projects in the energy sector outside Iceland, particularly in Europe. The main emphasis will be on the technological and operational revamping of older hydropower plants in order to improve utilisation and increase productivity.

Landsbankinn and Landsvirkjun hold equal shares in the company, each supplying ISK two billion in share capital. The undertaking's financial position will be strengthened by raising share capital abroad in the coming months, with Landsbankinn guaranteeing the sale of an additional one billion ISK in enterprise stock. The plan is to follow this up by registering HydroKraft Invest on foreign stock exchanges.

Landsbankinn and its subsidiaries have participated in financing many projects in the renewable energy sector. The bank's securities brokerage division in Europe analyses for its clients more than 800 companies, including some 40 enterprises in the energy sector. The Landsbankinn board of directors recently decided to place even greater emphasis on this area of finance, as announced at a recent conference sponsored by Kepler/Landsbankinn in Paris.

Having in the past decades taken the lead in developing the Icelandic electricity system, Landsvirkjun is the country's main electricity producer. The company also has many years of experience in developing and renewing electricity systems abroad. One example is participation in the French company Hecla, which works at assessing and modernising high-tension networks of the French power companies. Landsvirkjun is also a partner in the Swiss operator Sipenco, which undertakes improvements to hydropower plants in that country.

Sigurjón Þ. Árnason, Landsbankinn CEO, said that demand for renewable energy would grow significantly over the next few years. He expected opportunities for Landsbankinn to result from combining the bank's financial expertise with Landsvirkjun's experience of the operation and construction of hydropower plants and power systems to form the union represented by HydroKraft Invest.
 
Jóhannes Geir Sigurgeirsson, chairman of the board of Landsvirkjun, said that cooperation with Landsbankinn, with its specialist knowledge of the European investment and business sectors, would strengthen Landsvirkjun in its efforts to export the company's knowledge and experience in the energy sector, adding that Landsvirkjun definitely had a mission to fulfil in the international arena.

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