Investing.com -- Shares of Grenergy Renovables soared by 17% following the announcement of its divestment of phases 1, 2, and 3 of the Atacama solar plus batteries project to ContourGlobal, a KKR company, for a total consideration of USD 962 million.
This strategic move, which includes an earn-out of USD 50 million, is seen as a positive step towards strengthening the company's financials and has been well-received by investors.
The sale of the initial two phases for USD 490 million and the third phase for USD 472 million represents a combined enterprise value to invested capital (EV/IC) multiple of 1.55x.
Grenergy anticipates a capital gain of approximately €100 million in the fourth quarter of 2024 and an additional €200 million in 2025. Additionally, the company will receive USD 9.4 million from the pre-financing sale of phase 3.
This transaction, along with a previous deal with Allianz (ETR:ALVG), which had an enterprise value of €270 million and a gain of over €80 million, will significantly reduce Grenergy's net debt to EBITDA ratio from around 18x to a proforma of approximately 1x.
The company also retains about 80% of the remaining Atacama project, which includes 1.5GW and 8.6GWh of capacity, with further project financing and power purchase agreements (PPAs) expected to be announced soon.
RBC (TSX:RY) analyst Fernando Garcia commented on the deal, stating, "Grenergy's divestment of phases 1-3 of Atacama is the largest solar plus batteries' transaction in the world, in an extremely accretive deal done at 1.55x EV/IC."
The divestment has also alleviated concerns regarding Grenergy's balance sheet that emerged after the company's third-quarter results in 2024. The deal is seen by Garcia as a reinforcement of the belief that 2025 will be a pivotal year for battery technology investments, with Grenergy poised to capitalize on its strengthened balance sheet and the high number of investment opportunities in the sector.
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