Spanish renewable energy developers, asset owners and Independent Power Producers (IPPs) are missing out on opportunities to engage with international investors and maximise the value of their assets in the primary and secondary markets. This is according to Augusta & Co., a specialist financial adviser to the renewable energy industry, which has managed transactions to an aggregate value of over €10 billion throughout Europe.
In particular, Augusta has highlighted the limitations of an insular approach, whereby Spanish asset owners selling on projects are choosing to engage in bilateral discussions with familiar investors, rather than seeking to broaden the pool of prospective buyers – both domestic and international – via a Structured Sales Process.
These bilateral discussions limit the value that sellers can unlock from their assets, often allowing buyers to take the upper hand and dictate pricing. They are also leaving sellers vulnerable to complexities or weaknesses in the eventual Sales Purchase Agreement with respect to factors such as warranties or financial penalties.
Indeed, Augusta estimates that Spanish IPPs and developers could be missing out on up to 20% of potential asset value as a result of limitations to negotiating power, and inability to fully engage with the international investment community.
“Spain is currently a hotspot for European renewable energy, and has recorded a huge amount of deal flow over the past 18 months, demonstrating considerable investor appetite,” said Axel Narváez, Managing Director, Head of Spain, Augusta & Co. “In order to sustain this momentum, however, and for owners to unleash full value from their development and operational projects, the market needs to ensure that it is open to and bringing on board the investors that are the best fit for these assets.”
“By entering a Structured Sales Process, supported by an advisor with a genuinely international network, developers and IPPs in Spain can mitigate the risks inherent in dealing with a single party, and ensure that they achieve a fair sale value.”
For Spanish asset owners, an independently managed Structured Sales Process will bring a broader range of potential investors into play, including institutional investors from Spain and overseas. This will create a more competitive environment in which sellers have greater control over the terms of the sale, and the valuation of their project or portfolio.
By creating – and then narrowing down – a targeted shortlist of investors, advisors can ensure that buyers are sought who have a genuine interest in the asset and are prepared to offer a fair price. In turn, engagement with the wider international investment community will support Spain’s ambitions to more than double its installed asset base and meet its ambitious target of 74% renewable energy generation by 2030.
Source: Augusta & Co.