The board of Spanish major Repsol has approved the sale of a quarter of its growing renewables business to a consortium of French insurance company Credit Agricole Assurances and Swiss investor Energy Infrastructure Partners (EIP) for €905 million ($963 million).
The sale price implies a valuation of the Spanish oil and gas company’s RE business at €4.38 billion, including debt and minority holdings.
The unit has more than 1.6 gigawatts of installed renewables capacity across Spain, Portugal, the US and Chile, most of it in wind and solar.
“Having reputable partners such as Credit Agricole Assurances and EIP joining us in Repsol Renovables represents a validation of our renewable strategy, supports our ambition to be a key player in the energy transition and fulfils our expectations in this important process,” Repsol chief executive Josu Jon Imaz said.
“Our target is to reach an installed capacity of 6 GW in 2025 and 20 GW in 2030. As partners, they share our strategic vision to grow in renewables, contribute additional expertise and underscore the value of our growth platform.”
The transaction is expected to close before the end of the year, subject to regulatory approvals. Repsol Renovables will continue to be consolidated within the accounts of the Repsol Group.
Among Repsol’s renewables assets is a stake in the 25 megawatt WindFloat floating wind pilot array off Portugal. The company also plans to increase its offshore wind business through an alliance with leading offshore wind developer Orsted.
Repsol also owns majority stakes in major wind energy clusters in Spain, such as the 335 MW Delta 1 in Aragon.
The oil and gas company also owns a majority stake in the 264 MW Valdesolar photovoltaic (PV) array and the 126.6 MW Kappa PV complex, both in south-west Spain.
It is also building the 860 MW Delta 2 wind cluster in Spain, and has a 1.6-plus GW renewables pipeline in operation, construction and development in Chile, in partnership with Ibereolica Renovables.
In the US, Repsol has commissioned a first 62.5 MW solar array at Jicarilla 2 in New Mexico, which is scheduled to double in size, with an attached 20 MW battery storage.
The company last year bought 40% of US developer Hecate Energy, which has a project pipeline of more than 40 GW.
London brokerage Redburn said the transaction implied an equity value of €3.6 billion, viewing debt as off the balance sheet.
“We think the disposal, at a good price, is likely to be viewed positively by the market,” Redburn stated.
The brokerage also noted that it is not yet clear what the proceeds will be used for, given that Repsol's free cash position has improved enormously since the decision to sell off a stake in the renewables division was made.
“The choice is likely between accelerating renewables investments and accelerating shareholder returns. We suspect there is limited scope to materially ramp up organic renewables investment, given Repsol already raised spending levels in this area late last year. This would appear to favour shareholder returns,” the research note said.
EIG to swoop?
Earlier in the week, Repsol was reported to be in early discussions to sell a 25% stake in its oil and gas exploration and production business to Washington DC-based private equity giant EIG Global Energy Partners.
Reuters quoted unnamed sources to describe a deal that is also supposedly aimed at boosting the major’s capacity to make investments in renewables.
Analysts have valued Repsol’s upstream business at between €14 billion and €18 billion.
The Spanish company has already divested stakes in upstream businesses in several countries, including Russian assets earlier this year.
(This article first appeared in Upstream’s sister renewable energy publication Recharge on 10 June 2022.)