Acciona, a global infrastructure, water and renewable energy group, and Kohlberg Kravis Roberts & Co. LP (together with its affiliates, “KKR”), a leading global investment firm, today reached the financial close of their strategic alliance to consolidate and develop one of the largest operating international renewable energy portfolios in the world.
KKR has acquired a one-third stake in ACCIONA Energía Internacional (AEI), the international renewable energy generation business of ACCIONA Energía, for €397m, and will help fund future growth of the renewables portfolio. ACCIONA Energía, the Spanish multinational’s energy division, will retain the remaining two-thirds of AEI. KKR is making the investment from its global infrastructure fund.
Pending the compliance of certain conditions for some assets, an additional payment will be made upon completion of the same.
Once the reorganisation is complete, AEI will hold a diversified portfolio of ACCIONA Energía’s operating renewable assets outside Spain. The portfolio comprises 2.3 GW in 14 countries, including US, Mexico, Australia, Italy, Portugal and South Africa, which generate steady cash flows of circa €120m a year. Most of the assets are wind farms, with a small number of solar (photovoltaic and thermal) installations, which have an average remaining useful life of 21 years, and an average load factor of 36 per cent.
The investment gives an implied enterprise value to AEI of €2.6bn, including €1.3bn in equity and €1.3bn in net debt, making this one the world’s largest financial transactions in the renewable energy sector to date.
The alliance between KKR and ACCIONA also includes a management agreement under which ACCIONA Energía will operate AEI’s assets for 20 years for an annual fee. ACCIONA Energía will also give AEI a Right of First Offer on future renewable energy projects it develops within AEI’s operational territory. ACCIONA Energía has a strong pipeline of about 3GW that can be accelerated through this partnership.
The intention of both partners is to promote an international IPO through a YieldCo vehicle that will hold a significant number of the assets of AEI. The agreement includes an earn-out consideration in favour of ACCIONA of an additional purchase price up to €50m based on the outcome of YieldCo’s public offering.
Henry Kravis, co-Chairman and co-CEO of KKR, said: “This investment adds to our track record of building successful partnerships with corporates and families. I am really optimistic about the opportunity to partner with such a prominent renewable energy company and to help further develop what is already one of the largest operating renewable portfolios in the world.”
José Manuel Entrecanales Domecq, Chairman and CEO of ACCIONA, said: “The alliance between KKR and ACCIONA marks a new milestone for the renewable energy industry. With KKR as a long-term financial partner, ACCIONA is in a strong position to take advantage of the huge opportunities that lie in the global market for renewable energy.”