KKR in €236m European renewables deal

The deal marks KKR's first investment in European renewable energy. Partners Group is expected to co-invest in the venture.

Kohlberg Kravis Roberts (KKR) and Italian energy company Sorgenia have agreed to form a joint venture to operate wind energy projects in France, marking KKR’s first investment in European renewable energy.

The deal has an enterprise value of €236 million, according to a statement. The partnership gives KKR access to wind parks with operational capacity of 153 megawatts as well as 95 megawatts of additional capacity that will be built in the next 18 months, according to Jesús Olmos, European head of infrastructure at KKR.

Olmos said that KKR will also consider future investments in Sorgenia projects.

Olmos said that Sorgenia and KKR would be equal equity partners in the venture. He said KKR’s equity commitment would come from the firm’s Global Infrastructure Investors fund as well as from co-investors. Swiss fund manager Partners Group is expected to be one of the co-investors, Olmos said.

Olmos said the size of KKR’s equity commitment has not yet been finalised. Closing on the transaction is expected in September. Sorgenia expects to receive a cash inflow of €60 million as a result of the partnership, according to a statement.

The nine operational wind farms are located at various sites in the west and north of France.

Olmos said that the European renewable energy sector’s stable regulatory regime and long-term tariffs would make it “an important source of opportunities” for KKR’s infrastructure business in the future. He added that KKR focuses on infrastructure investments that “are yielding cash and yielding dividends from day one”, and that European renewable energy projects present many opportunities for investments with stable cash flows.

“It's a very hot market in Europe and so there are plenty of opportunities in the renewable space of the kind we are looking for,” Olmos said.

He said that France was a particularly attractive region for wind energy investment as the country is currently reliant on nuclear power, but looking to expand other potential sources of alternative energy.

He said KKR is also focused on investments in European utilities and transport, particularly toll roads.

Last year, KKR held a second close on $515 million for its Global Infrastructure Investors fund. KKR partner Scott Nutall said in a conference call last November that the fund does not have a target, though Infrastructure Investor has previously reported that the firm was hoping to raise as much as $2 billion for the fund.

KKR also manages a $1.1 billion separate account on behalf of Korea’s National Pension Service (NPS). NPS and KKR acquired a 23.44 percent stake in Colonial Pipeline from Chevron last October.