Infracapital has partnered with Italian utility Enel Group – for a second time in as many years – to launch a joint platform that will focus on distributed generation and energy efficiency projects located primarily across Spain.
Infracapital, the infrastructure equity investment arm of M&G, will acquire an 80 percent stake in the new company. The Spanish subsidiary of Enel X – Enel Group’s global business line dedicated to innovation and digital solutions – will own 20 percent.
Under the terms of the agreement, Enel Group will “contribute” to the new company around 200 distributed photovoltaic generation, co-generation (combined production of electricity and heat), tri-generation (coupling the generation of electricity and heat with cold air and water) and energy efficiency projects. The Rome-based utility said in a statement that most of the projects are located in Spain, but there are also some operating in France and Portugal.
The two parties did not disclose financial details nor the total generating capacity of the 200 projects being transferred to the new company. Both declined to comment beyond their respective statements.
London-based Infracapital said in a statement that it will fund the future growth of the new company, while Enel X, through its Spanish arm Endesa X, will operate the existing projects and develop new ones. The investment firm did not indicate how much capital it intends to invest nor to what degree the new company is expected to grow.
Infracapital will be funding its portion of the investment through Infracapital Greenfield Partners I, a vehicle that closed on £1.25 billion ($1.6 billion; €1.5 billion) in November 2017. The fund invests in late-stage development, construction and expansion of infrastructure assets in Europe.
According to pension fund documents, IGP I is targeting returns in the mid- to high teens and aims to make between eight and 15 investments ranging between £25 million and £200 million in ticket size.
IGP I, which Infrastructure Investor understands is nearly fully deployed, has made nine investments to date. Other assets in the portfolio include Gigaclear, Bioenergy Infrastructure Group, Infram and Wightfibre.
It also includes Cogenio, the joint platform Infracapital and Enel X launched in December 2018 to serve commercial and industrial clients in Italy. Cogenio’s initial portfolio comprised 11 combined heat and power projects representing 27MW of power capacity with the aim of adding 20MW of capacity annually. It is unclear whether that objective has been met. However, a source told Infrastructure Investor that “Cogenio has grown accordingly to plan and has a healthy pipeline of new projects for the next three to five years”.
Infracapital has already launched IGP II, which “is expected to follow a largely similar investment strategy … investing in transport, energy and telecoms sectors”, according to documents from the East Sussex Pension Fund, which in June approved a £20 million commitment to IGP II.
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