Vortex, a renewable energy platform managed by EFG Hermes’ private equity arm, has agreed a €550m sale and purchase deal (SPA) with a subsidiary of EDP Renováveis (EDPR) for a 49 per cent stake in a 664 MW portfolio of European wind assets.
The deal comes within the framework of EFG Hermes’ strategy that targets developing infrastructure investment portfolio of high interest rates in Europe, especially after taking over 49 per cent of EDPR France late 2014.
EFG Hermes Head of Private Equity Karim Moussa said: “In just 18 months since its first transaction acquiring 49 per cent of EDPR France, Vortex has gained considerable momentum and market recognition in the European renewable energy space. Our track record and knowledge of the market was a decisive edge in a very competitive M&A process that saw Vortex bidding head-to-head with major global investors”.
“As our second remarkable transaction in Europe, it underlines our ability to identify structure and execute large-scale deals that deliver on our strategy of building a yielding infrastructure platform. This acquisition, which nearly doubles our AUMs to just over USD 1.1 billion, is a testament to our position as the region’s leading renewable energy investment manager,” He added.
“We have successfully raised EUR 550m to fund the transaction; 40 per cent in the form of equity, 5 per cent of which was a seed investment by EFG Hermes and 95 per cent of which takes the form of sovereign capital from the Gulf Cooperation Council region,” says Moussa. “The remaining 60 per cent of the acquisition finance is in the form of a 13-year facility provided by five prominent European banks.”
Bakr Abdel-Wahab, Managing Director of Infrastructure Private Equity at EFG Hermes, adds: “The transaction was complex to structure and execute as it covers four jurisdictions with different regulatory and operational regimes. The premium underlying assets, generating in excess of 1.7 TWh per annum, have four years of average age, fifteen years of remaining regulatory life and blue-chip turbine technology. This gives Vortex exposure to a highly regulated European revenue stream. Moreover, its margins and wind capacity factors are above the market average, setting the floor for very attractive and competitive cash yields.
“In 2015, our first year of investment in EDPR France (334 MW gross capacity), active asset management allowed Vortex to generate a superior cash yield to its investors, mainly due to strong operational improvements, cost-savings and generation enhancement initiatives.”
Noting that the transaction puts Vortex well on its way toward its goal of owing in excess of 1 GW of net installed capacity in the coming two years, Moussa added: “We will continue to pursue high quality yield-generating assets with superior return potential for our investors in developed markets and selective emerging markets.”
The deal is due to be concluded during 2016 second quarter, after receiving approval of regulatory commissions and fulfilling conditions of the agreement.
