IPPToday #293: Enel sells stake in 1.8 GW renewable projects in Mexico for US$1.4 billion
- 828 MW Villanueva solar project in Coahuila
- 260 MW Don José solar PV project in San Luis de la Paz
- 200 MW Amistad wind project in Coahuila
- 129 MW Palo Alto wind project in Jalisco
- 103 MW Salitrillos wind project in Tamaulipas
- 100 MW Vientos del Altiplano wind project in Zacatecas
- 200 MW Dominica wind project in Charcas
Related M&A Transactions
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Enel, acting through its renewables subsidiary Enel Green Power (EGP), has closed the sale of 80% of the share capital of eight special purpose vehicles (SPVs), which own a combined 1.8 GW renewable capacity in Mexico, to the Caisse de dépot et placement du Québec (CDPQ) and CKD Infraestructura México (CKD IM), an investment vehicle of some of the largest pension funds in Mexico.
The eight SPVs own a portfolio consisting of three power plants already in full operation (a total of 429 MW), three recently-connected plants (a total of 1,089 MW), and two projects under construction (a total of 300 MW), for an overall total of about 1.8 GW.
Specifically, the portfolio consists of about 1.1 GW from the solar plants Villanueva I (469 MW), Villanueva III (359 MW) and Don José (260 MW) as well as about 0.7 GW from the wind farms of Amistad (198 MW), Dominica (200 MW), Palo Alto (129 MW), Salitrillos (103 MW) and Vientos del Altiplano (100 MW). These plants hold long-term power purchase agreements (PPAs).
As a result of the closing of the deal, EGP and CDPQ own a 20% and a 40.8% stake respectively in the SPVs through a newly-formed holding company, Kino Holding, while CKD IM owns a 39.2% stake in the same SPVs, through newly-formed sub-holdings.
EGP will continue to operate the plants owned by the SPVs and will complete those still under construction through two newly-formed subsidiaries. In addition, starting from 1 January 2020, EGP may contribute or transfer additional projects, increasing its indirect interest in the SPVs and becoming their majority shareholder.
The enterprise value of 100% of the SPVs is equal to about US$2.6 billion, with the equity value amounting to about US$0.3 billion, project financing accounting for about US$0.8 billion and the related party loans for a total of US$1.5 billion.
As a result of the transaction, CDPQ and CKD IM paid US$1.4 billion, which comprised a consideration of about US$0.2 billion for the majority interest in the SPVs and around US$1.2 billion for related-party loans granted to the SPVs. The consideration paid is subject to adjustment typical of this type of transaction, primarily based on variations of the net working capital of the SPVs.
The closing of the transaction enables the Enel Group to reduce its consolidated net debt by about US$2.4 billion. In this regard, the net financial position of the assets involved in the transaction was already no longer part of Enel Group’s net financial debt, as the investment is classified as “held for sale”.
This transaction was carried out using the Build, Sell and Operate (BSO) model.