London – Vortex, a European renewable energy platform managed by the private equity arm of EFG Hermes, has entered into a sale and purchase agreement to acquire 100% of a 365 MW operational solar PV power portfolio in the United Kingdom, owned by TerraForm Power.
The transaction is valued at an Enterprise Value of c. GBP 470 million and comprises 24 operational assets, representing one of the largest portfolios of solar PV in the United Kingdom. The closing of the transaction is subject to the completion of certain conditions precedents.
“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 United Kingdom, France, Spain, Belgium and Portugal, making it one of the largest renewable energy focused investment managers in Europe,” said EFG Hermes Group Chief Executive Officer Karim Awad. “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.”
The Portfolio has an average asset age of two years and an estimated useful life of c. 30 years. It is backed by the United Kingdom Government’s Renewable Obligation Certificates and 14-year power purchase agreements with creditworthy off-takers. It currently carries a project finance debt facility of c.GBP 300 million. Vortex intends to refinance the existing debt shortly after the completion of the transaction.
With this transaction, Vortex has successfully deployed c. USD 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.
“The United Kingdom is 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,” said EFG Hermes Head of Private Equity Karim Moussa.
Nick Boyle, CEO at Lightsource, said: “We are delighted to have partnered with EFG Hermes to secure this deal. At Lightsource 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 c. USD 17 billion and a power generation capacity of 12 GW in 2016, has subscribed into Vortex to fund 50% of the equity share capital of the transaction. The remaining 50% will be initially underwritten by EFG Hermes with a final targeted hold of 5% of the equity, consistent with the previous transactions undertaken by Vortex.
Karim Moussa adds, “It is our pleasure to announce our 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.”
TNB CEO Datuk Seri Ir. Azman bin Mohd said: “This is a rare opportunity to acquire a sizeable solar power business via Vortex in the United Kingdom and 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).
Source: EFG Hermes