Macquarie Russia continues deal spree with $625m energy buy

The Macquarie Renaissance Infrastructure fund – together with Xenon Capital Partners and the Russian Direct Investment Fund – has bought 26.4% of wholesale Russian power generator Enel OGK-5 for $625m. The seller was Russian energy firm Inter RAO.

Macquarie’s Russian infrastructure fund – a joint venture with emerging markets-focused investment bank Renaissance Capital known as the Macquarie Renaissance Infrastructure Fund (MRIF) – is on a roll, announcing its fourth acquisition hot on the heels of this week’s $50 million purchase of telecommunications infrastructure company Russian Towers.

MRIF’s most recent deal sees it acquire a 26.43 percent stake in Enel OGK-5 – a wholesale power generator in Russia with an installed capacity of 9,576 megawatts – together with Xenon Capital Partners’ Rusenergo Fund and the Russian Direct Investment Fund (RDIF).

The seller is Russian energy firm Inter RAO, which said it will receive an upfront payment of $625 million from the consortium for the stake. Inter RAO may also get an additional amount of up to $125 million from the buying consortium, based on future proceeds from Enel OGK-5 exceeding a benchmark internal rate of return of 18 percent. If gains creep above the $125 million mark, then Inter RAO will be entitled to a 20 percent cut of the additional sum.

In an interview with Reuters, Kirill Dmitriev, RDIF’s head, said that “of the whole consortium, we provided only one-quarter of the money going in”. MRIF and Rusenergo could not be reached for comment in time for publication regarding the size of their investments.

MRIF’s chief executive, Damian Secen, said the fund “is delighted to have acquired a major stake in Enel OGK-5,” which he dubbed “a high quality infrastructure asset with a capable and professional management team in place”. RDIF’s Dmitriev added that the deal “is a robust endorsement of investor sentiment toward the Russian utilities industry and further demonstration of the appeal of Russia’s growing economy to international investors”.

Enel OGK-5’s majority shareholder is Italian energy giant Enel.

It’s been a busy week for MRIF. Two days ago, the $630 million fund, which targets Russia and the Commonwealth of Independent States (CIS) countries, announced it had clinched its third investment with the acquisition of Russian Towers. It also said the fund was close to being halfway invested with over $250 million of capital already deployed.

In addition to this week’s deals, MRIF has invested in Brunswick Rail, in December 2010, and GSR Energy, late last year.

MRIF spent three years on the fundraising trail, closing last June below its original, $1 billion target.