Sector Spotlight - Q2 2011 European Environmental Roundup

By Peter Kneller

The European renewable energy sector saw a heightened number of mid-sized M&A deals in the second quarter of 2011, with a strong showing from infrastructure funds and big buyout houses.

Perhaps most interestingly, the sector witnessed two infrastructure exits. At the start of June, Infigen, formally Babcock & Brown, finally managed to sell off its 128MW German wind portfolio in a EUR154m deal. The group had previously called off an auction of the assets in April 2010 after deciding bids were too low. The acquirer was German leasing and asset management business KGAL, as exclusively revealed by InfraNews on June 17.

Also in Germany, DIF sold off a 72.5MW portfolio of operational wind energy assets to EOS Holding, a Swiss company owned by a group of Swiss utilities and public institutions. The transaction occurred in March, though this was first reported, exclusively, by InfraNews in June. The assets are understood to have been valued at approximately EUR100m.

In addition, EOS also acquired a further 91MW of German wind from Danish developer Scan Energy, again, for approximately EUR100m.

In May, Antin Infrastructure Partners reached an agreement to acquire a 28MW Italian solar PV portfolio, valued at just over EUR100m, from developer Kinexia, while NIBC took an undisclosed stake in a 32MW French and Belgian wind portfolio in the same month.

European Renewables Ready for Investment
KKR global head of energy and infrastructure, Marc Lipshultz, told an IIF Americas conference, organised by InfraAmericas in New York in February, that the European renewables sector was ripe for investment. The firm backed up his comment when it announced the creation of a 50-50 joint venture with Sorgenia, the Italian energy company, to develop the production of energy from wind farms in France at the start of June. Assets in the JV, which has an enterprise value of EUR236m, include operational wind parks of around 153MW in installed capacity as well as a 95MW pipeline in an advanced stage of development. Swiss-based Partners Group will be investing alongside KKR in the venture.

Terra Firma has been increasingly vocal about its renewable energy appetite in recent times, and the firm struck two deals through portfolio companies in the second quarter. Its UK-based renewable energy business Infinis acquired a 100MW operational wind farm portfolio from SSE in April, more than doubling its installed wind capacity. This was followed up by Italian PV business Rete Rinnovabile’s EUR98m bolt-on of a 19MW portfolio of solar PV assets from Sorgenia in May.

In other deals, BNP Paribas Clean Energy Fund acquired the 25MW Gruig wind farm in Northern Ireland from developer RES UK & Ireland in April. In addition, Spain-based renewables business Gamesa lined up two exits, reaching an agreement to sell a 48MW wind farm to Polish utility PGE and selling a 30MW Spanish wind farm to Danish renewables business Greentech, both in June.

Elsewhere, Swiss utility BKW acquired two Italian wind farms totalling 62MW in installed capacity from Italian developer Fortore Energia in May.

Offshore Wind
Germany launched its long-anticipated EUR5bn offshore wind financing programme in June. The scheme, to be run by KfW, will have the firepower to support up to 10 offshore wind projects in Germany.

In the first instance, KfW can directly lend up to EUR400m to offshore projects alongside commercial banks. However, KfW’s commitment is not allowed to comprise more than 50% of the total debt package for a given project.

A second option would involve KfW making a direct investment in a project of up to EUR350m alongside commercial banks, while it could also fund commercial banks in the bank club a total of up to EUR350m.

The package also offers contingency financing support in the event of over-runs.

It is envisaged that the KfW package will help plug a debt funding gap for offshore wind projects which had previously been unable to bring in the requisite amount of bank finance.

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