EFG HERMES PRIVATE EQUITY’S HEAD OF ENERGY EXPLAINS THE BANK’S CLEAN ENERGY INVESTMENT STRATEGY

Clean Energy Pipeline caught up with Bakr Abdel-Wahab, Head of Energy at EFG Hermes Private Equity, to discuss the investment bank’s clean energy plans for the year, business strategy, new markets to have caught its eye, and its UK solar holdings.

 

Since joining EFG Hermes in 2010, Abdel-Wahab has helped spearhead some of the investment bank’s biggest clean energy deals and essentially helped to grow its assets under management to well over €1 billion.

“A few years back we started a platform called Vortex Energy and over three large-scale transactions we have a net ownership of 822 MW,” Abdel-Wahab told Clean Energy Pipeline.

Vortex Energy’s clean energy portfolio is split between solar PV and onshore wind projects.

The UK is where Vortex’s solar portfolio is exclusively located and that totals 365 MW of generating capacity, while it’s 457 MW of onshore wind assets are spread on the continent between Spain, Portugal, Belgium and France.

“On a deal by deal basis, we act as investment manager, we raise equity from our group of investors, we also raise debt as required, to make acquisitions and investments,” Abdel-Wahab said of the EFG Hermes strategy.

“Typically out of the equity for any deal that we do, EFG Hermes, our sponsor, seeds up to 5% of the amount – the remaining 95% is funded by institutional and strategic investors.”

Flexible investment strategy

Abdel-Wahab told the publication that EFG Hermes had the added advantage of not being tied to a specified fund strategy, allowing the investment bank to cast it’s on eye on several markets, depending of course on investor interest.

“We marry the right investor with the right deal, so that differs from many other who could somehow be confined by their original fund mandate,” said Abdel-Wahab.

“[For example] some European funds are only allowed to do OECD and they can’t look at emerging markets, [and therefore] we have more flexibility to tailor and evolve our strategy to suit the overall sector and macroeconomic trends – this allows us to be more independent and agile.”

In terms of 2018’s activities, Abdel-Wahab told Clean Energy Pipeline that the investment bank was looking at refinancing deals, as well as one or two new deals; though he couldn’t reveal whether they would reach financial close during the year.

New markets on the horizon

He continued: “We’re still looking at Spain, Italy and France as well,”

“We‘re also looking at some emerging markets in parallel, potentially Latin America and some Middle East and North Africa selectively.

“What’s becoming interesting is the price of renewable energy is falling down to compete with conventional energy, and that makes it more sustainable in our view. It’s not heavily subsidised and hence is exerting less pressure on the governments’ balance sheet.

“And because the technology prices is falling down as well, we are seeing this trickle through to the tariffs that are offered, while still maintaining sustainble risk adjusted returns for investors and sponsors.”

For the UK, Abdel-Wahab said that EFG Hermes was unlikely to do any large-scale portfolio acquisitions but rather some smaller bolt-on acquisitions for its investor base, with the focus now on accruing returns after such an expensive deal.

Abdel-Wahab concluded: “I think any new transaction that we do would probably get us to the 1 GW mark.”

By Andrew Nguyen at andrew.nguyen@centaurmedia.com on 12/02/2018

 

This interview was written and published by Clean Energy Pipeline

 

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