Vortex buys UK solar power portfolio for $581mnby Baset Asaba on Jan 10, 2017
Egyptian investment bank, EFG Hermes, announced that its renewable energy platform Vortex has entered into a definitive agreement with TerraForm Power to acquire a major solar energy portfolio in the UK for £470 million ($581 million).
The portfolio, which includes 24 operational assets, has a combined 365 megawatts (MW) of power and an estimated useful life of around three decades, said the company in a statement.
Acquisition of one of the largest UK solar PV portfolios gives Vortex 822MW of net installed renewable energy generation capacity and total investments of $1.4 billion in the sector across Europe to date, it added.
The closing of the transaction is subject to the completion of certain conditions precedents.
On the strategic move, EFG Hermes Group CEO Karim Awad said: "This landmark acquisition caps a two-year period in which our private equity team has built Vortex from a newcomer into a platform managing 822 MW in net capacity across the UK, France, Spain, Belgium and Portugal, thus making it one of the largest renewable energy focused investment managers in Europe."
“The transaction is also an example of our group’s announced merchant banking strategy of effectively utilizing our balance sheet to support our core businesses and enhance shareholder returns,” stated Awad.
According to him, the Portfolio has an average asset age of two years and an estimated useful life of 30 years. It is backed by the UK government’s Renewable Obligation Certificates and 14-year power purchase agreements with creditworthy off-takers.
It currently carries a project finance debt facility of £300 million. Vortex intends to refinance the existing debt shortly after the completion of the transaction.
With this transaction, Vortex has successfully deployed $1.4 billion in the European renewables market since 2014 after acquiring net installed wind capacities of 457 MW through assets managed by EDP Renováveis SA across four Western European jurisdictions.
Lightsource, Europe’s largest developer of solar PV projects with more than 1.3 GW of assets under management, will act as a technical partner for operations and management services post completion of the acquisition.
Karim Moussa, the head of private equity at EFG Hermes, said the UK was a key contributor to Europe’s solar market.
"This portfolio offers us an attractive entry point with a long-term investment proposition in the country. Our existing asset base in Vortex has paid superior cash yields to our investors to date. We are delighted to add this high-quality Portfolio to the platform and bring in the United Kingdom’s premier solar developer as our technical partner," he noted.
Nick Boyle, the CEO at Lightsource, said: "We are very proud of the in-house knowledge and expertise that we have developed over the last five years, which allows us to provide a gold-standard service in operations & maintenance to third party clients and thus help us secure such quality business. We look forward to a long and successful partnership with EFG Hermes."
Tenaga Nasional Berhad (“TNB”), one of the largest utility players in Asia with a market capitalization of $17 billion and a power generation capacity of 12 GW in 2016, has subscribed into Vortex to fund 50 per cent of the equity share capital of the transaction.
The remaining stake will be initially underwritten by EFG Hermes with a final targeted hold of five per cent of the equity, consistent with the previous transactions undertaken by Vortex.
Moussa expressed delight at the new partnership with TNB, a major reputable industry player in Asia.
"With such strong additional backing of our platform, we shall continue adding significant renewable capacities to Vortex through future acquisitions in the United Kingdom and other European countries," he added.
TNB chief executive Datuk Seri Ir. Azman bin Mohd pointed out that this was a rare opportunity to acquire a sizeable solar power business via Vortex in the UK. "It helps us deliver the renewable energy part of Tenaga’s international expansion plan more than one year ahead of schedule.”
Vortex’s advisors on the transaction included Watson Farley and Williams, Davis Polk, and Shearman & Sterling (legal), Deloitte (financial, tax and accounting), Enertis (technical), Willis (insurance), Baringa (market), Operis (model audit) and Global Capital Finance (financial advisor).
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