Australia-based investment fund Babcock &Brown has sold the operator of 11 Portugal hydro projects totaling 89.1 MW to Portugal utility Energias de Portugal (EDP) and investment bank Banco Espirito Santo de Investimento S.A. (BESI).
The acquisition price for 100 percent of equity was 38 million euros (US$55.9 million). Net debt amounts to 140 million euros (US$205.9 million), for an enterprise value of 178 million euros (US$261.8 million).
In a December 21 transaction, EDP acquired 20 percent and BESI acquired 80 percent of Pebble Hydro � Consultoria, Investimentos e Servicos Lda. At the same time, EDP signed a promissory sale and purchase agreement with BESI to acquire the bank’s 80 percent stake. The conclusion of that agreement is subject to approval by the competition authority, EDP said. BESI acted as financial adviser to EDP in the transaction.
EDP said the 11 hydropower projects operate under a special regime in Portugal with operating licenses expiring between 2025 and 2040. It said Pebble also has two small hydro plants under development totaling 4 MW.
In 2006, the plants’ average tariff was 84.80 euros (US$124.77) per megawatt-hour, which is updated based on inflation during the license period. Based on an average hydrological year, EDP estimated Pebble Hydro should have 19 million euros (US$27.9 million) in earnings before interest, taxes, depreciation, and amortization (EBITDA).
Babcock &Brown acquired the Pebble Hydro plants as part of the purchase of Portuguese renewable energy company Enersis II SGPS S.A. in 2005. In November, Babcock &Brown sold half of an Enersis-developed 525-MW wind portfolio to Babcock &Brown Wind Partners.
EDP said the small hydro plants have a high level of operating synergies with EDP’s existing hydro portfolio. The utility said the acquisition is in line with EDP’s growth strategy in the renewables business, targeting reduced carbon dioxide emissions and attractive rates of return.
In December, EDP Producao and Eviva Energy S.A. won a concession competition for construction and operation of the 78-MW Ribeiradio/Ermida hydroelectric development on Portugal’s Vouga River. (HNN 12/21/07) In October, EDP agreed to pay 636 million euros (US$907.4 million) to operate for 35 years the 259.2-MW Alqueva and 10-MW Pedrogao hydroelectric projects on Portugal’s Guadiana River. (HNN 10/25/07)