Malaysian pension fund enters 365MW UK solar portfolio

KWAP buys a 45% stake for £67.5m from EFG Hermes, which will continue to hold a 5% interest as it targets further investments in emerging market renewables.

A Malaysian pension fund has bought 45 percent of one of the UK’s largest solar portfolios from Egyptian investment bank EFG Hermes in a £67.5 million ($90.4 million; €76.6 million) deal.

Kumpulan Wang Persaraan (KWAP) made its first direct investment in the renewable energy space with the share purchase of the 365MW portfolio, joining compatriot utility Tenaga Nasional Berhad, which owns 50 percent of the collection. The 124.78 billion ringgits ($28.3 billion; €26.4 billion) pension fund has a 10 percent allocation to alternatives and said following the deal it intends to increase its exposure in real assets.

Vortex, the private equity arm of EFG Hermes, has retained a 5 percent stake in the holding vehicle. The sell-down has been agreed seven months after the initial £470 million deal was completed, with the pair buying the portfolio from TerraForm Power, the yieldco vehicle of the defunct US renewables developer SunEdison.

The firm announced its intention to underwrite the share upon completion of the deal and also secured a £337 million refinancing of the debt, in a transaction EFG Hermes said was two times oversubscribed.

The transaction agreed with KWAP forms part of EFG Hermes’s strategy to capitalise on strong interest from Asia-based LPs in investing in renewables and infrastructure, Karim Moussa, head of private equity and asset management at EFG Hermes, told Infrastructure Investor.

The group has invested about €1.3 billion in renewable energy assets in Europe in the past three years and plans to continue to offer pension funds in Asia a similar platform, “creating a good gateway” for owning assets otherwise out of reach, Moussa said. Future deals are initially planned in Italy’s fragmented solar market but he added that the firm is also targeting opportunities in Mexico, Brazil, India and Egypt.