Infrastructure manager Prostar Capital plans to spin-off its South Korean hydrogen power generation business in two to three years, likely through a trade sale, a senior official told Infralogic.

The unit, under Prostar’s portfolio company Kyungnam Energy, aims to deliver at least 180 MW of hydrogen power capacity in roughly the same timeframe, said Dave Noakes, Prostar co-founder and senior managing director. Achieving the target generation capacity will require a total investment cost of around USD 1bn, he said.

The hydrogen unit, “already the largest private capital-owned hydrogen power generation business in Asia Pacific”, currently generates around 100 MW, according to him.

Kyungnam Energy’s fuel cell business portfolio comprises four projects, each ranging from 9.57 MW to 39.8 MW in capacity, its website shows.

The business has a 20-year offtake with domestic utility KEPCO, with fixed annual pricing and 100% feedstock pass-through, Noakes said. Last August, Kyungnam Energy won capacity in South Korea’s hydrogen power auction, with a 10 MW hydrogen fuel cell power plant in Geoje.

The platform also owns hydrogen refuelling stations for buses, including the country’s first green hydrogen refuelling station, he added.

Hydrogen is expected to support more than 20% of Kyungnam’s revenues by 2030, versus around 1% today, said Noakes. He also serves as chairman of Kyungnam Energy, a city gas distributor based in Changwon, South Korea.

“Kyungnam Energy is a unique investment in OECD Asia infrastructure, and one of the very few regulated utilities owned by private capital,” said Noakes. “These are highly stable businesses which, by virtue of their regulated status, are ideal platforms to engage in broader energy transition investment.”

According to a source familiar, Prostar had previously explored a continuation vehicle for the gas distribution company with Jefferies advising. It is not known if the talks, which had targeted domestic Korean investors, remain ongoing, he said.

Prostar and Jefferies declined to comment on the continuation vehicle. Kyungnam Energy did not respond to a phone call for comment.

Prostar, together with co-investor BlackRock, bought 95% of Kyungnam Energy in 2017.

Kyungnam Energy supplies natural gas to over 880,000 residential, commercial and industrial customers in the Gyeongsangnam-do province. It also owns and operates facilities that produce solar power, generate steam from recycled plastic incineration, and produce biogas from sewage.

Prostar will consider further bolt-ons for Kyungnam Energy, as well as establishing new platforms for renewables, such as rooftop and floating solar, he said.

It will also explore rolling out the hydrogen power generation business into a wider pan-Asian strategy, targeting supply to semiconductor fabrication facilities and data centres, said Noakes.

Mid-market investor Prostar has been fundraising for a USD 400m Asia Pacific-dedicated vehicle, also with Jefferies as placement agent. It is unclear if the manager is still proceeding with the fundraise, which launched in late 2024. Prostar declined to comment on the fundraising.

Established in 2012, Prostar is also invested in: US-based gas transportation firm Eureka Midstream; GTI Statia, a bulk liquid storage terminal located on a Dutch island in the Caribbean; and United Arab Emirates-based bulk liquid storage facility Fujairah Oil Terminal.

Operations at the port of Fujairah, where Prostar’s oil facility is located, were temporarily suspended this month after a drone strike and fire amid the US-Iran war, according to media reports.

Prostar operates from offices in Greenwich Connecticut, Hong Kong, Seoul, and Sydney.