Egypt’s leading investment bank EFG Hermes announced on Wednesday that it has signed $208m deal to acquire a 49% stake in wind energy company EDPR France which has a combined gross capacity of 334 MW.
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, read a Wednesday statement from EFG Hermes.
“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, adding that his company’s interest in infrastructure investment generally, and in renewable energy in particular, reflects their aim of being catalysts for sustainable development while simultaneously generating attractive returns for their shareholders and co-investors alike.
The deal is EFG Hermes’s second investment in the generation of green energy in less than 12 months, coming after an earlier commitment via the InfraMed fund to establish the Arab world’s first utility-scale wind farm in Jordan.
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), and describes itself as 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.
Joâo Manso Neto, CEO of EDP Renewables stated in the statement: “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.”
Karim Moussa, Head of Private Equity at EFG Hermes, said that the company has had “a strong surge in investor appetite for cash-yielding renewable assets, mainly driven by the prevailing low interest rate environment.”
He added that “this deal underlines our capability to transact swiftly and allocate capital from MENA to an attractive global asset class”.
EFG Hermes said that approximately half of the $208m buyout will be funded via an acquisition finance facility secured from leading European banks.
The investment bank added that it will provide seed capital of approximately $5m for the equity component of the transaction, with the remainder raised from the GCC (Gulf Cooperation Council). Completion of the transaction is subject to regulatory approval and other customary closing conditions, the company explained.
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.
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), EFG Hermes noted.