Fundraising

NextEnergy seeks up to €500m for EU solar

The solar specialist is targeting at least €300m from the IPO of investment company NextEnergy European Solar Utility PLC in London.

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NextEnergy European Solar Utility PLC (NEESU), a new investment company focused on utility-scale solar energy assets in the European Union (excluding the UK), is seeking to raise up to €500 million from its initial public offering (IPO) on the London Stock Exchange.

The firm, which yesterday published its prospectus, is targeting at least €300 million but may increase the size of the issue to as much as €500 million if demand is in excess of the target amount. The result of the issue is expected to be announced on 10 July with admission to trading on 14 July.

The company will seek to provide investors with a “sustainable and attractive dividend over the long term” by investing in and operating solar photovoltaic (PV) plants in countries within the European Union (EU). The strategy, which excludes the UK, will focus initially on Italy and Spain.

In a statement, the firm said Italy and Spain together represent around 27 percent of the EU’s installed solar PV capacity, and most of this capacity has an operating history of more than two years.

It also said the two markets represent a consolidation opportunity with the top 10 players accounting for market shares of 5 percent and 13 percent in Italy and Spain respectively. The average size of plants is small and most are financed with individual leasing finance.

NEESU is targeting a dividend of between three and five euro cents in 2015, eight euro cents in 2016 and nine euro cents in 2017. It is targeting aggregate returns to investors equating to a levered internal rate of return (IRR) of between 10 percent and 12 percent. It also anticipates some capital growth from re-investing excess cash flows generated beyond the dividend.

NextEnergy Capital (NEC) is the adviser to NEESU. NEC is also adviser to the London-listed NextEnergy Solar Fund (NESF), which has raised and invested £246.6 million (€345.9 million; $390.1 million) into 18 UK solar power plants since floating in April 2014.

Yesterday, NESF announced it had agreed to acquire the Bowerhouse and Wellingborough solar power plants – in Somerset and Northamptonshire respectively – for up to £22 million. The plants account for a combined 17.8 megawatt-peak (MWp).