Naturgy, Statkraft and Cubico bid for Ardian's wind farms

Naturgy, Statkraft and Cubico are entering the final stretch to try to acquire the 12 wind farms that Ardian has put up for sale through its investee ASR Wind. The transaction, which is being advised by Banco Santander and BBVA, is valued at 650 million euros and will give the buyer a portfolio of 422 MW of regulated assets with an average age of nearly 13 years.

Ardian, a French fund with 150 billion in assets under management, received a total of 9 bids for ASR Wind but has been left with these last three competitors for the final -binding bidding- phase.

Ardian entered ASR Wind in 2019 in a deal involving Juan Angoitia, Alexis Ballif and Alvaro Sanz. The main interest in these assets now focuses on their hybridization capacity, as they could lead to the installation of another 435 MW of solar power at the access points of these plants.

Ardian created the AGR-AM platform in 2021. This vehicle, led by Santiago Varela, was intended to bring together the French fund's renewable assets to give it a more industrial operation.

When this vehicle was set up, Ardian already had 660 MW of renewable energy in Spain and 100 MW in Latin America. By technology, 283 MW were photovoltaic and 477 MW wind. Most of the operations to purchase these assets date back to 2018 and 2019 in which the fund bought 4New, Novasol, Ausines, Parrot or the assets now for sale of ASR Wind, to create the foundations of its platform.

Ardian also bought Renovalia Reserve in 2019 from the Cerberus and Blackrock funds for 550 million. The French fund holds 95%, while the remaining 5% remained in the hands of Exxus Managment Partners (a firm founded by former executives of Plenium Partners) who are in charge of management. The purchase of these twelve wind farms would make industrial sense for any of the three parties involved. On the one hand, Naturgy could increase its market share in Spain in some of the autonomous communities where it already operates.

The wind farms for sale are located throughout Spain: four in Palencia, four in Albacete, two in Barcelona, one in Granada, one in Lugo and another in Zamora.

For Statkraft, the intention is to reach 3 GW in operation in our country as soon as possible, as its CEO, José Miguel Ferrer, explained in a recent interview with elEconomista.es: "We are looking at quite a few projects in operation to increase our portfolio. We have an appetite to buy. We are looking at wind, solar and hydro. Here we have the competitive advantage in the industrial part with respect to the big funds. We are able to think about repowering and hybridizations." In the case of the Cubico Sustainable Investments fund, the deal would allow it to strengthen its wind energy portfolio in Spain, in addition to the possibility of developing new photovoltaic capacity.

Market pullback

The advances in the transaction come at a complicated time for the sector, which has seen the pace of transactions slow down. According to TTR data, the renewables sector in the Iberian market saw an increase of almost 65% in 2021 but recorded a drop of almost 21% in 2022.

The volume of mergers and acquisitions in the Spanish energy market, one of the most dynamic countries in the region in that sector, grew steadily over the last four years before falling sharply in 2022, while the aggregate amount remained relatively stable. The conflict between Russia and Ukraine and rising energy prices have caused a revolution in the M&A market in recent months. However, the dynamism of the sector will not depend on the macroeconomic situation, but will take a long-term view. In other words, it will behave countercyclically. The volatility of the exchange rate against the dollar, interest rates and the tension in the economy and the market in general are affecting company valuations, so investors are placing a new emphasis on profitability and cost control amid the correction that is taking place in the public markets. However, the United States plays a relevant role in the sector and in its interest in strategic energy assets in the Iberian region.

Spain and Portugal have been investing in renewable energy in recent years, which should result in increased M&A activity and the development of new projects. Although opportunities are expected in less active sectors recently, such as gas or hydropower, traditional renewables, onshore wind and photovoltaics, will continue to be the focus of investors' attention, along with new technologies, such as offshore wind, which may be one of the most active niches at this stage in the medium to long term. Naturgy, Statkraft and Ardian declined to comment Monday. Cubico was not available at press time.