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UK assets of SunEdison’s Terraform Power sold for £470m

Investing through its European renewables platform Vortex, EFG Hermes has teamed up with a Malaysian utility to buy 365MW of solar projects from the defunct developer's yieldco.

Egyptian investment bank EFG Hermes is set to acquire a portfolio of 24 operating solar plants in the UK with a capacity of 365MW in a deal worth £470 million ($582.5 million; €549.3 million).

The investment will be made by Vortex Solar, a subsidiary of the bank’s private equity division. Vortex is already active in the Central European renewables market, having cemented its position through the €550 million acquisition of 23 wind farms across Europe in Spain, Portugal, Belgium and France.

In this latest transaction, EFG will form a tie-up with Malaysian utility Tenaga Nasional Berhad where both parties will each provide 50 percent of the equity.

EFG Hermes head of private equity Karim Moussa told Infrastructure Investor that it is looking to sell 45 percent of this equity holding to other investors, ideally pension funds and insurance companies. EFG also intends to refinance the £300 million debt facility carried by the portfolio to make the investment more appealing. 

The Malaysian firm said the deal is part of its strategy to hold 5GW of power generation internationally by 2020 and Moussa said the partnership could produce opportunities for EFG to co-invest in Asian markets too.  

The plants, which all benefit from the UK’s subsidy regime and have been operating on average for about two years, were bought from TerraForm Power, the yieldco vehicle of bankrupt US renewables developer SunEdison which owns close to 3GW of wind and solar assets.

Moussa said EFG had been in contact with TerraForm Power about the acquisition a few months before SunEdison filed for bankruptcy in April last year. Brookfield Asset Management is in talks over a buyout of TerraForm Power itself after lodging a bid towards the end of last year.

“This portfolio offers us an attractive entry point with a long-term investment proposition in the country,” Moussa added. The latest deal provides for a “good asset base”, he said, with EFG eyeing further additions to the portfolio in the near future.

The acquisition brings Vortex’s European portfolio to a net capacity of 822MW. After sealing a deal with Portuguese utility EDPR last year, the company aims to build itself up to 1GW in net capacity, a target Moussa said could be reached this summer.