KKR plugs €417m in renewables portfolio

The US firm has bought a third of Spain’s Acciona Energía International, ahead of a potential IPO of the €2.6bn energy business.

Kohlberg Kravis Roberts (KKR) has invested in Acciona Energía International (AEI), the international energy generation business of Madrid-listed developer Acciona.

The New York-based firm, which is funding the deal via its $1 billion global infrastructure fund, will pay €417 million for a one-third stake in the unit. Acciona Energía, the Spanish group’s energy division, will retain the remaining two-thirds.

AEI will hold Acciona Energía’s operating renewable assets outside Spain, which comprise 2.3 gigawatts (GW) of capacity in countries including the US, Mexico, Australia, Italy, Portugal and South Africa. The portfolio is mostly made up of wind farms, with a small number of solar assets.

The deal gives AEI an implied enterprise value of €2.6 billion, including €1.3 billion in equity and €1.3 billion in net debt. Acciona Energía will operate AEI’s assets for at least 20 years under a management agreement, and will also give the unit a right of first offer on future renewables projects developed by the group.

“Our strategic alliance will broaden our international reach, and it will transform the scale of what we can achieve,” said José Manuel Entrecanales Domecq, chairman and chief executive of Acciona, in a statement.

Jesús Olmos, head of KKR infrastructure in Europe and head of KKR’s operations in Spain, said that the deal was part of the firm’s efforts to diversify its infrastructure fund. The vehicle has made 12 investments in North America and Europe to date, comprising five renewable energy deals as well as transactions in the water, district heating, locomotive leasing and parking sectors.

Acciona and KKR plan to float all or part of AEI's assets through a YieldCo – a publicly traded company that owns a portfolio of projects and distributes the cash flows produced to its shareholders. The agreement, which also includes a potential purchase price top-up consideration of up to €50 million tied to the outcome of the IPO, is expected to close before the end of the year.

AEI’s assets are expected to generate distributable revenues of about €120 million to the pair.