This week’s edition of Smart Energy Finances looks at Enel SpA‘s sale of 50% holdings in Gridspertise to CVC for a joint ownership scheme. The announcement comes in days after reportage that the Italian utility had been seeking a state-backed credit line of €16 billion ($16 billion).
Also on the financial radar this week, two separate green bonds have been announced in different parts of Europe.
Enel sells 50% stake in Gridspertise
Enel signed, through Enel Grids S.r.l., the agreement to sell their 50% quota in heretofore wholly-owned subsidiary Gridspertise to the international private equity fund CVC Capital Partners Fund VIII.
The agreement provides that CVC will pay €300 million ($293.2 million), equivalent to an enterprise value of €625 million ($610.8 million) on a 100% basis.
The agreement includes potential deferred payments that could bring the enterprise value up to €1 billion ($977.2 million) on a 100% basis.
The Group hopes that the transaction will generate a positive impact on their EBITDA of approximately €500 million ($488.6 million), alongside an expected positive effect on the Group’s consolidated net debt of around €300 million ($293.2 million).
A joint regime
Following the transaction, Enel and CVC will operate the Company in a joint control regime.
Gridspertise, which states as its mission the digital transformation of power grids through advanced network technologies and solutions, was launched just over a year ago, in September 2021.
The company provides distribution grid operators access to sustainable solutions for the digital transformation of electricity distribution networks in three main areas: metering and grid edge digitalisation, networks infrastructure digitalisation and field operations digitalisation.
Target markets include Europe, Latin America and North America, and expand towards Asia-Pacific, where the investment in smart grids will drive infrastructure upgrade projects in the near future.
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The closing of the sale is expected by the end of 2022.
The conditions include various administrative authorisations needed for the transfer to CVC of the 50% quota in Gridspertise, such as the golden power procedure with the Presidency of Italy’s Council of Ministers and the clearance to be issued by the competent Antitrust Authorities.
The announcement came in from Enel days after reportage from Reuters that the Group’s finances has led to a request for a state credit line.
Credit request
Two days ago, Reuters reported that Enel Group was able to secure a preliminary go-ahead for a state guaranteed €16 billion credit facility. The preliminary green light sets in motion a process for the state-owned entity that entails numerous approval steps by the boards of the bank, which is expected to stretch over several weeks.
Italian state exports credit agency SACE will need to clear the guarantees which will then need a final green light from the ministry.
The ministry has up to 120 days from SACE’s request to answer.
According to Reuters, the state guarantee scheme was designed by Rome to help domestic companies hit by surging energy prices.
This is clearly indicative of the impact of tough market conditions energy companies are facing.
However, despite these conditions, it is encouraging to see that green financing is still making gains and pushing forward the energy transition.
For example, the last two weeks have seen two separate green bonds being issued by major players, one by the Dutch-German TSO TenneT and another by the European Bank for Reconstruction and Development (EBRD).
TenneT’s €3 billion Dutch-German financing
TenneT Holding B.V. (issuer ratings A3/A-, stable outlook) launched and priced a senior green bond issue of €3 billion ($2.9 billion). The transaction was split in four tranches of:
- €650 million ($634.8 million); term: 6 years; coupon 3.875%
- €500 million ($488.3 million); term: 9.5 years; coupon 4.250%
- €1 billion ($980 million); term: 12 years; coupon 4.500%
- €850 million ($830.1 million); term: 20 years; coupon 4.750%
With the four separate tranches, TenneT has received support of six active Joint Bookrunners: ABN AMRO, Deutsche Bank, HSBC, ING, Rabobank and SMBC.
Proceeds will, in line with previous issues, be used to invest in eligible green power transmission projects in the Netherlands and Germany.
The projects will be focused on connecting large-scale offshore wind farms to the onshore electricity grid and investments in the onshore transmission grid with the main objective to increase the transmission of renewable energy.
Further details on these projects and the project selection process is set out in TenneT’s Green Financing Framework dated March 2022, for which ISS ESG has provided a Second Party Opinion to confirm the alignment with the ICMA Green Bond Principles.
Also of interest:
Energy giants ink tripartite grid contract for a greener UK
Investing in green energy innovation in Rotterdam
$13.8 million for Georgia’s first green bond
The ERBD has invested $13.8 million in the first green bond listed and traded on the Georgian stock exchange.
The $80 million green secured bond offering by the Georgian Renewable Power Operations (GRPO) is also the first corporate issuance of this size in the country.
The notes are US$-denominated with a 5-year bullet maturity and carry a 7% coupon. They were issued and sold at par value. The issuance was supported by the Dutch Entrepreneurial Development Bank (FMO), International Finance Corporation (IFC), the EBRD and the Asian Development Bank (ADB).
Proceeds will be used to refinance the shareholder loan provided by JSC Georgia Capital (GCAP) for redeeming the renewable energy business’ portion of JSC Georgia Global Utilities’ $25 million 7.75% Eurobond issued in July 2020. The transaction will also diversify the GRPO’s funding sources.
Through the investment, the GRPO is set to promote gender equality across the male-dominated energy sector and will implement an outreach campaign to raise awareness of the importance of women’s participation in the sector.
According to the EBRD, the GRPO, a subsidiary of the London Stock Exchange (LSE)-listed GCAP, is one of the leading renewable energy platforms in Georgia. The company operates four hydro power plants, and the only wind power plant in Georgia with a combined capacity of 71MW.
For the latest updates on the finance and investment scene within the energy transition make sure to follow our column, Smart Energy Finances Weekly.
Cheers,
Yusuf Latief
Content Producer, Smart Energy International
