Arab investors of EFG Hermes investment bank acquired 49% of French wind energy firm for $208 million.
EDPR France, a subsidiary of EDP Renewables, one of the top four global renewable energy firms, has a portfolio of 33 operational wind farms. EFG Hermes has operations in Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and the UAE and has more than 800 employees.
EFG Hermes is listed in the Middle East Investors Directory with the code OR29.
More details follows
EFG Hermes, the leading investment bank in the Arab world, announced today that its private equity arm has signed a USD 208 million transaction to acquire a 49% equity shareholding and outstanding shareholders loans in EDPR France. The transaction comes as part of the firm’s strategy of broadening its traditional role as a catalyst for institutional capital into MENA markets by helping its partners and investors tap compelling global opportunities.
EDPR France has a portfolio of 33 operational wind farms with a combined gross capacity of 334 MW. The company is a subsidiary of EDP Renewables (EDPR), one of the top four global renewable energy companies that develops, constructs and operates renewable energy assets with over 8.6 GW of installed capacity across three continents.
“Our first investment beyond the borders of the Middle East and Africa is a natural outgrowth of our emphasis on infrastructure private equity and, moreover, marks the launch of our direct investment strategy,” said EFG Hermes Co-Chief Executive Officer Karim Awad. “Our interest in infrastructure investing generally — and in renewable energy in particular — reflects our aim of being catalysts for sustainable development while simultaneously generating attractive returns for our shareholders and co-investors alike.”
The transaction underscores EFG Hermes’ ability to originate, raise equity and debt and execute deals on an international scale in a highly competitive industry. It is also the firm’s second investment in the generation of green energy in under 12 months, coming after an earlier commitment via the InfraMed fund to the establishment of the Arab world’s first utility-scale wind farm in Jordan.
Joâo Manso Neto, CEO of EDP Renewables, stated, “I am pleased to announce this new partnership and the breakthrough agreement with EFG Hermes, which is part of the asset rotation plan that the company has been implementing in order to deliver its growth strategy.”
“We are delighted to enter into a partnership with such a reputable global player in renewables. EDPR has an outstanding track record and is widely known in the industry for its operational excellence,” said Karim Moussa, Head of Private Equity at EFG Hermes. “We’ve recently seen a strong surge in investor appetite for cash-yielding renewable assets, mainly driven by the prevailing low interest rate environment. This deal underlines our capability to transact swiftly and allocate capital from MENA to an attractive global asset class.”
Approximately half of the USD 208 million buyout will be funded via an acquisition finance facility secured from leading European banks. EFG Hermes will provide seed capital of approximately USD 5 million for the equity component of the transaction, with the remainder raised from the GCC. Completion of the transaction is subject to regulatory approval and other customary closing conditions.
Under the terms of the agreement, EFG Hermes’s private equity arm will manage the investment vehicle, while EDPR France will retain operational control over the acquired assets.
“EDPR France’s asset portfolio offers a strong dividend stream and healthy risk-adjusted returns for the investors,” Moussa added.
EDPR France has a 15-year feed-in-tariff arrangement with the French government’s majority-owned Électricité Réseau Distribution France, securing the investment’s future cash flows by an A+ rated off-taker.
“This investment demonstrates our ability to identify, structure and execute attractive infrastructure transactions and gives us exposure to a sizeable portfolio of high-quality French wind assets, in terms of their average age, operational track record and commercial arrangements,” said Bakr Abdel Wahab, Director of Infrastructure Private Equity at EFG Hermes.
The deal also complements recent infrastructure investments undertaken by InfraMed, a c. USD 500 million private equity fund co-founded by EFG Hermes that invests in infrastructure in the Southern and Eastern Mediterranean region with primary focus on greenfield projects. Among InfraMed’s investments are a USD 100 million commitment to the Egyptian Refining Company, which is building a USD 3.7 billion greenfield petroleum refinery in Egypt, and a c. USD 40 million investment in building the 117 MW Tafila Wind Farm, Jordan’s first utility-scale wind farm.
“Seeding investments and raising substantial third-party funding is a key pillar of our model going forward in private equity,” concluded Moussa. “We will also continue building our outbound investment practice and actively screen for opportunities to match deep pools of capital in the MENA region with attractive yielding opportunities in Europe and beyond, particularly in the infrastructure and renewable energy verticals.”
EFG Hermes was advised on the EDPR France buyout by Global Capital Finance (corporate finance), Shearman & Sterling and Watson, Farley & Williams (legal), Garrad Hassan and SGS (technical), Grant Thornton (tax and accounting) and Pöyry (energy market).
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