Mirova, an affiliate of Natixis Investment Managers, has created a new co-investment vehicle, which has attracted existing investors in its current Energy Transition fund, Mirova Eurofideme 4 (MEF4), as well as new clients.
The vehicle was created specifically to participate, alongside Engie and Credit Agricole Assurances, in the acquisition of the second largest hydroelectric portfolio in Portugal from EDP. The deal, valued at EUR2.2 billion, completed in late December.
Investors in the new co-investment vehicle include Banca March, Merseyside Pension Fund, Natixis Assurances, Groupama, EB Erneuerbare Energien Fonds Europa and LHI Group. MEF4, together with the MEF4 co-investment vehicle, own 25 per cent of the total consortium. Engie owns 40 per cent, while Crédit Agricole Assurances own 35 per cent.
The deal, seen as one of the major renewable transactions in Europe of the last decade, demonstrates a significant scale-up in the size of the transactions and assets that Mirova is now successfully targeting, as well as highlighting a new appetite among institutional investors to be direct investors in large renewable infrastructure projects.
Raphael Lance, Head of Energy Transition Funds at Mirova, says: “We have been investing in renewable infrastructure projects for over 18 years now, and only recently have we witnessed this willingness from our investors to commit directly to the projects. For this transaction we had a very strong round of partners from the beginning and were confident that others would join. We are grateful to our co-investors to have given us their trust, a positive endorsement which encourages us to target much larger assets than previously and helping to diversify our portfolio.”
Juan Antonio Roche, Head of Products at Banca March, says: “This project will allow our clients to co-invest alongside Banca March and a consortium of top international players in sustainable energy generation. Together with our partners and their capabilities we will create value for Banca March and our clients amidst a complex context that is demanding new sources of sustainable profitability, underpinning our commitment with ESG investments as a key trend in our strategic vision with a huge potential in the next decade.”
Dr. Bernhard Graeber, Head of Real Assets at EB – Sustainable Investment Management GmbH (EB-SIM), a subsidiary company of Evangelische Bank and the advisor of EB Erneuerbare Energien Fonds Europa, adds: “The hydropower portfolio in Portugal represents a unique investment opportunity for our clients. We are delighted to participate in this transaction alongside with Mirova and other institutional investors.”
Franz Unterbichler, Head of Renewable Energies at LHI Group, adds: “Renewable energies are an integral part of our product portfolio for institutional investors. The fact that we now include the first hydroelectric power plants in our structures alongside solar and wind power plants, is an important step within the framework of our sustainable investment strategy.”
Peter Wallach, Director of Pensions, Merseyside Pension Fund, says: “MPF is a longstanding investor in the Infrastructure asset class and we’ve deployed over GBP250 million into the Renewables sector. We are very pleased to co-invest alongside Mirova in this attractive portfolio of operational Portuguese hydro assets. This co-investment should generate good returns for our pension members in a cost-effective way, and the pumped storage facilities within the portfolio will also play a critical role in advancing the region’s decarbonisation of power generation.”
The acquired assets consist of the second largest hydroelectric portfolio in Portugal, located in the Douro valley, with 1.7 GW capacity and a weighted average concession term of 45 years. This portfolio includes three recently commissioned pump storage units along with three recently renovated run-of-river plants. The plants will be operated by Engie.