News / IPPToday #76: Enel sells 80 % stake in 1.7GW renewable energy portfolio

IPPToday #76: Enel sells 80 % stake in 1.7GW renewable energy portfolio

🕔 October 11, 2017
IPPToday #248: Acciona secures US$264 million for 400 MW solar project in Mexico

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Enel S.p.A., acting through its renewables subsidiary Enel Green Power S.p.A., has signed agreements with the Canadian institutional investor Caisse de dépot et placement du Québec (CDPQ) and the investment vehicle of the leading Mexican pension funds CKD Infraestructura México S.A. de C.V. for the sale of 80% of the share capital of a newly formed Mexican holding company, owner of the entire capital of eight special purpose vehicles (SPVs).

The SPVs, currently owned by EGP through the subsidiary Enel Green Power México S.r.l. de C.V., in turn own three plants in operation and five under construction for a total capacity of 1.7 GW. Under the agreements, EGP will continue to operate the plants owned by SPVs and will complete those still under construction by two newly formed subsidiaries. In addition, as from January 1st, 2020, EGP may transfer additional projects to Holdco. As a result of these possible transfers, it could therefore increase its interest in Holdco until it becomes the majority shareholder.

The transaction is worth US$1.35 billion, of which a price of about US$340 million for the sale of 80% of the Holdco’s share capital and about 1,010 million US dollars for financing (related-party loans) granted to the SPVs by CDPQ-CKD. Taking into account the required investment for plants completion to be funded through project financing for approx. 0.9 billion US dollars as well as the related party loans for a total of 1.3 billion US dollars, a 100% valuation of Holdco's enterprise value will be equal to about 2.6 billion US dollars, with the equity value amounting to about 0.4 billion US dollars.

The closing of the transaction, subject to a number of pending ordinary conditions and receipt of the necessary authorisation from the Mexican antitrust authorities, is expected to occur by the end of 2017. The price will be paid at the closing, bearing in mind that the amount will be subject to a subsequent price adjustment normal for this type of transaction, based on variations of the net working capital of Holdco.

The transaction will enable the Enel Group as of the date of closing, to reduce its consolidated net debt by about 1.9 billion US dollars.

Antonio Cammisecra, Head of Enel Green Power, said:

“The new model represents an opportunity for partners willing to invest in a large and diversified portfolio of projects in strategic areas, supported by long-term power purchase agreements, with the plants developed, built and operated by Enel Green Power. This strategy enables us to further exploit our global pipeline of solar and wind projects whereby gain access to additional resources, accelerating our growth. By attracting solid long-term partners in this transaction, EGP confirms the strategic role that Mexico plays in its global presence. We are enthusiastic about the opportunities offered by the Mexican renewables market and it is our intention to continue to invest in the country where EGP will play an active role by managing operating assets and developing new initiatives”.

Macky Tall, Executive Vice-President, Infrastructure at CDPQ, stated:

“This transaction broadens our exposure in renewable energy alongside a leading operator. By creating a platform with key Mexican partners in 2015, we wanted to be positioned to identify the best opportunities in Mexico, a priority market for CDPQ. This new investment in high-quality assets is perfectly in line with our strategy, and allows us to strengthen our partnership with local pension funds and other major players in Mexico.”

Eduardo Ramos, General Manager of CKD IM, commented:

“This acquisition marks an important step in the partnership between CKD IM and CDPQ, which will now have a well-diversified investment platform across growing sectors such as renewable energy and transportation. Enel is a world-class company with a strong footprint in Mexico, and its expertise in project development, construction and operation makes it a strategic partner for us.”

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