EFG Hermes makes first European investment

The private equity division of the Cairo-based investment bank has agreed to pay $208 million for a 49 percent stake in EDPR France, a renewable energy company whose portfolio includes 33 operational wind farms with a total capacity of 334 megawatts (MW), EFG Hermes said in a recent statement.

The investment is both EFG Hermes’ first outside the Middle East and North Africa (MENA) region, as well as the first transaction under its private equity division’s new direct investment strategy.

An acquisition finance facility secured from European banks will fund approximately half of the $208 million total, while EFG will provide seed capital of approximately $5 million, according to the statement. The remainder will be raised in the Gulf Cooperation Council (GCC) countries, the bank said.

“We’ve recently seen a strong surge in investor appetite for cash-yielding renewable assets, mainly driven by the prevailing low interest rate environment,” EFG Hermes’ head of private equity Karim Moussa said. “This deal underlines our capability to transact swiftly and allocate capital from MENA to an attractive global asset class.”

Under the terms of the agreement, EFG will manage the investment vehicle while EDPR France will retain operational control over the assets.

The investment in EDPR France is the second in the renewable energy sector EFG Hermes has realised within the past 12 months.

In December 2013, EFG announced a $40 million investment in the 117MW Tafila Wind Farm, the first utility-scale wind farm to be built in Jordan and estimated to cost $290 million. That transaction was made through InfraMed, a $500 million private equity fund co-founded by EFG Hermes, focusing on the southern and eastern Mediterranean region.

The fund’s four other co-founders are Italy’s Cassa Depositi e Restiti; France-based Caisse des Dépôts et Consignations; the European Investment Bank; and Morocco’s Caisse de Dépôt et de Gestion.

EFG Hermes’ private equity division, which advises InfraMed, currently manages a portfolio of 12 companies and has total assets under management of $900 million.

EDPR France is a subsidiary of Madrid-based EDP Renewables, the fourth-largest wind energy producer in the world. Energias de Portugal (EDP), a global energy company and Portugal’s largest industrial group, is the majority shareholder of EDPR.