Dive Brief:

• New York-based investment firm KKR will acquire German renewable energy platform and power producer Encavis AG in a voluntary takeover valued at 2.8 billion Euros ($3.05 billion), the companies announced Thursday.
• The new private company will aim to have 7 gigawatts of installed operating capacity by the end of 2027, an increase of Encavis’ initial goal of 5.8 GW. Encavis said the public bid has the express support of its management and supervisory boards, and German heating and refrigeration manufacturer Viessmann will become an investor under KKR’s management. 
• The trio of companies will look to capitalize on and support the growth of clean energy in Europe, following the passage of the European Union’s Green Deal and its related policies. “Unlocking the full potential of renewable energy requires expertise as well as substantial long-term capital,” Vincent Policard, a KKR partner and co-head of European Infrastructure, said in the press release.

Dive Insight:

Encavis AG, which is a subsidiary of the Encavis Group, comprises a portfolio which currently has an operating capacity of around 2.2 GW, spanning 10 European countries, according to KKR. The independent power producer operates over 190 solar photovoltaic and 40 onshore wind farms and has long-term power purchase agreements, the release said.

KKR bought all outstanding Encavis shares for $19.06 per share, a 33% premium of the European energy provider’s three-month volume-weighted average, the investor said, and 54% higher than its March 5 closing price of $12.36 per share. Encavis will be delisted from the German stock exchange as a public company “as soon as practically possible after closing,” according to the press release.

Encavis Chief Financial Officer Christoph Husmann, also spokesperson for the management board, said the company looked to bring on partners with the same long-term approach and experience investing in the energy transition. 

“Over the past years, Encavis has grown into one of the leading independent power producers in Europe and has strong ambitions to further continue on this growth path,” Husmann said in the release. “We are convinced that with the additional financial and strategic support, we will be able to leverage our assets and competences.”

German investment firm Abacon Capital and other prior Encavis shareholders have signed agreements to sell 31% of their shares and partly roll over the rest of their shares to the new company, Encavis said. 

After outperforming its expectations last year, Encavis said it expects a decline in earnings before interest, taxes, depreciation and amortization and earnings before interest and taxes in 2024. 

KKR identified Europe’s Green Deal, as well as the Inflation Reduction Act in the U.S., as “proactive” policies that are accelerating the energy transition’s progress in its 2024 Sustainability Outlook. The firm said the policies have helped derisk decarbonization investments, as the business community has “embraced investing in climate solutions.”

However, much of the progress from policy developments and project announcements is largely “still prospective,” according to Neil Brown, KKR Global Institute’s managing director. Showing that climate change mitigation solutions are credible, create jobs and offer both supply chain affordability and security will allow industries to build credibility and maintain momentum.

“The next year will be an important one for showing there are real solutions to climate issues that work for consumers and investors,” Brown said in January.