Connor Teskey: Sure, so probably the easiest way to answer that question is let’s talk about the exposure we have today as well as our approach going forward. Our exposure today to solar panel manufacturing is part of a large structured investment we made in a company called Avaada Energy in India. Avaada Energy is one of the largest independent renewable power owner, operators and developers. And that is the vast majority of the bulk of their business. But in addition to being that large scale owner and developer of renewable power, they also have two other business lines. One, they are doing some solar panel manufacturing themselves. And two, they are also in the early stages of some green hydrogen production, all of this in India.
So our exposure to the space is through Avaada, where we have made a downside protected structured investment to fund their growth across all three of those verticals. But the vast majority of that business today is a, I would say, relatively down the fairway leading renewable power developer in India. In terms of, so, and while we do have a good relationship with Avaada and we’d happily use some of those solar panels when they are up and running and producing, our investment exposure is, I would say, very, very modest relative to our global procurement needs. Well, that’s our exposure today. We are seeing around the world a trend towards just the scaling up of the supply chain for both renewable power and other de-carbonization solutions. And we could see ourselves in the future look to be an investor in the scaling up of that supply chain, but only if we can do so on a very attractive risk-adjusted return basis and with an investment profile that we are comfortable with.
And that essentially means we would only do it if our investment was back-stocked by long-term take-or-pay off-take contracts, very similar to what we look for when we build a new solar plant or build a new wind farm. So we would not rule out investing in supply chain in the future, but only if we can do so with an investment profile commensurate with what we typically target. And that means it would have to be backed by long-term off-take contracts.
Nelson Ng: That’s great color. I’ll leave it there. Thanks, Connor.
Operator: Our next question will come from the line of David Quezada with Raymond James.
David Quezada: Thanks. Good morning everyone. Maybe first one for me just on the comments in the release around inbounds that you’ve gotten, inbound calls since the Origin deal was announced. Just curious if there’s any color you can provide on what kind of opportunities you see there, maybe in terms of the nature of those deals, geographical location, the scale of those opportunities, any colour on that?
Connor Teskey: For sure. What we would say is, well, the outcome of the Origin vote was disappointing. Going through that process in the highly public nature of it, we really demonstrated one, not only the business plan we were willing to sign up for, but also the operating capabilities and capital commitment we would throw behind one of those large-scale business transformation or power transformation opportunities. The other thing that I think was demonstrated throughout Origin is, well, yes, it did represent buying perhaps a different initial business than when we buy a pure-play renewables developer. What became very clear in our explanation of what we were doing there is, our business plan was really predicated on the exact same thing we do everywhere else around the world.
It was predicated on being a leading high quality best-in-class renewable power developer and just doing that within a different company or business construct. I think that was very illustrative and illuminating to the market because we have received inbound and I would say those inbounds are across North America, South America, Europe and Australia since the announcement of Origin. The one point I would highlight, however, David, is these are very large and strategic decisions for our company to make. There’s really changing the trajectory of a business, you know, a large scale CapEx program to transition businesses that leading businesses in their market to less carbon intensive and more de-risked and more valuable business strategies but over a multi-year period.
Therefore, those types of transactions, they don’t happen overnight. They involve a long-term courtship period, education process, working with those companies before a transaction can be agreed upon or come to fruition. So while we are having a number of those conversations today. I would suggest that we’re excited about them, but they do tend to be longer lead time deals.
David Quezada: Excellent. Thanks for that, Connor. And then maybe just one more for me. Any quick thoughts on, I mean, it certainly sounds like the M&A pipeline is alive and well and the stabilized rate environment, things have been better. But I’m just curious what you think the, I guess, uncertainty around the US election, how could that affect things as the year goes on, maybe uncertainty around what happens with the tax credits?
Connor Teskey: Yeah, certainly. Great question. We will revert back to a point that I think it’s really critical not to lose sight of, and it ties to a bunch of the major themes we’ve been discussing on today’s call. Today energy transition, decarbonization, and renewable power development is undoubtedly driven by corporate demand far, far, far more than it is by government push. And therefore, while politics does have a role to play, it is in no way going to disrupt the rapid growth and the current trend line of investment and opportunity in those sectors. However, I do think it is important to, you know respond to some of the rhetoric and headlines in the market today, depending on what might happen in the US Elections. And I do think there’s two very important things to highlight.
