Vortex, a renewable energy platform managed by EFG Hermes’ private equity arm, has agreed a 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 transaction is valued at EUR 550 million and includes a portfolio of 23 wind farms in four European Union jurisdictions, including Spain (348 MW), Portugal (191 MW), Belgium (71 MW) and France (54 MW).
“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,” says EFG Hermes Head of Private Equity Karim Moussa.
“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.
“I am pleased to announce this transaction, which further expands our strong partnership with Vortex, which has been a great success to date. This is part of the asset rotation plan that the company has been successfully implementing in recent years,” says João Manso Neto, CEO of EDP Renováveis.“This strategy allows EDPR to crystallise the value of its projects’ future cash-flow stream and re-invest in the development of quality and value accretive projects.”
“We have successfully raised EUR 550 million 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 adds: “We will continue to pursue high quality yield-generating assets with superior return potential for our investors in developed markets and selective emerging markets.”
Execution of the SPA that was announced today would see Vortex’s net installed capacity rise to 457 MW across Western Europe, rising from 132 MW of net installed capacity as of late 2014, when Vortex had acquired a 49 per cent equity stake in EDPR France in a USD 208 million transaction.
The transaction, which is subject to regulatory approval and other conditions precedent, is expected to close in the second quarter of this year.
Vortex’s advisors on the transaction include Linklaters (legal), Shearman and Sterling (legal), PwC (tax and accounting), DNVGL (technical), Willis (Insurance) and BNP Paribas (Financial Advisor).
