The operation allows investors of the three funds sold, especially large net worth individuals managed by Andbank, to achieve net returns after success fee of up to 33% per year.

Everwood Capital, the fund manager specializing in alternative investment and founded by former bankers from Goldman Sachs, UBS or Morgan Stanley, has sold its first three portfolios of renewable assets to Reden Solar, a French investment vehicle owned by private equity funds. Infravia Capital Partners and Eurazeo

It includes three portfolios with 21 solar photovoltaic plants located throughout Spain totalling 25MW. The operation, whose price has not transcended, is valued by market sources at more than 150 million euros.

The sale process, arranged by PwC and Garrigues, has attracted a lot of interest. Not surprisingly, there have been 48 interested parties, of which three bidders finally submitted a binding offer. As this Tuesday, Reden Solar and Everwood closed the operation.

The transaction has achieved annual returns for the owners of the capital managed by Everwood Capital of between 17.8% (Fund I), 18.6% (Fund II) and 33.1% (Fund III) net IRR after the success fee. Fundamentally, high net worth individuals managed by Andbank, the investor that has bet the strongest on this renewables project.

Those who decided to invest in these three solar photovoltaic funds have recovered between 155% and 170% of their investment in less than three years. In addition, Everwood Capital had already returned 66% and 44%, respectively, of their investment in Funds I and II prior to the sale.

According to José Antonio Urquizu (former Goldman Sachs, former Portobello Capital, former Credit Suisse and former Telefónica M&A), founding partner of Everwood, «the strategy that was proposed was to buy plants from small investors who preferred to exit renewables after strong regulatory cuts in 2014. After that, consolidating the plants and generating synergies. Optimizing the assets from a technical and also financial point of view to allow, once the regulatory framework has been clarified, to sell in the best conditions, especially in an environment of great appetite for this type of investment, with a scenario of interest rates close to zero and infrastructure funds with low cost of capital for whome it represents a good opportunity».

The result is a strong performance for investors, including institutional investors. The challenge was to buy the plants from widely scattered investors, then finance the plants – where entities such as Santander, Triodos Bank, CaixaBank or Liberbank participated – to finally choose the ideal moment, with the Government and the opposition ensuring that profitability for these plants will remain above 7% of investment. Here it should be noted that just two years ago, in 2017, the former Minister of Energy, Álvaro Nadal, intended to reduce the level of feed-in-tariffs by around 30%.

Finally, there is the high interest of international funds, with low cost of capital but unable to achieve sufficient returns with the classic financial investments in fixed income and other low-risk assets, which ended up convincing Everwood that it was time to sell and return the investment to its clients, who have achieved returns well above the most optimistic scenario they were contemplating.

Alfredo Fernández Agras (former UBS, former Merrill Lynch and former Morgan Stanley), founding partner and president of Everwood Capital, explains that the value of the operation lies in the bet they made in 2014, after the regulatory cuts. The moment was the most complicated, since all big investors were fleeing from Spanish renewables at the time. However, Andbank studied it and after more than a year of evaluation gave its approval. The results come now. Other large private equity funds such as Oaktree or KKR have also carried out similar operations with great success.

Repeat the success

Now, Everwood Capital wants to repeat, but under premises that do rely on regulations but on market conditions. It is raising its Fund IV with a target of 300 million euros to manage. For now, it has already investment commitments for 150 million euros, including Andbank clients, as well as institutional investors, among which the fund of funds of the Spanish Government Fond-ICO stands out, which will invest another 27 million euros.

For this new investment, they intend to buy greenfield solar photovoltaic projects. They already have 50MW in Escatrón (Zaragoza) and are studying the purchase of larger projects. «Fund IV will replicate the success achieved in previous funds», assures Fernández Agras.

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