Saturday 07, January 2017 by Isla MacFarlane

EFG Hermes buys UK solar power portfolio

The private equity arm of EFG Hermes bought the portfolio from TerraForm Power for GBP 470 million

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 per cent of a 365 MW operational solar PV power portfolio in the UK, 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 UK, 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 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 deployed c. $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 UK 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.

 

Tenaga Nasional Berhad (TNB), one of the largest utility players in Asia with a market capitalisation of c. $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 50 per cent 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.

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