KKR blows into French wind

7 June 2011

Kohlberg Kravis Roberts & Co (KKR) has formed a joint venture with an Italian developer to tap the French wind market, in the private equity giant’s first European renewables investment.

The deal between KKR and Italian solar and wind developer Sorgenia has an enterprise value of €236 million ($346 million).

Jason Lovell, partner in the energy group at international law firm Eversheds, said the deal marks a new enthusiasm from US private equity groups to join their European brethren in wind investments.

“As the ability to put in place non-recourse project financing for major renewable projects remains slightly behind the curve, this high demand for capital means we are seeing newer sources of finance – for example wind farm developers over the last year have launched private retail bonds and sought to bring in institutional investors,” he added.

Sorgenia will contribute all 153MW of its already installed capacity in France to the joint venture, which includes 149MW fully owned by the JV and around 16MW in which the JV owns a 25% stake. A further pipeline of 95MW in advanced stages of development have also been added to the JV, in which each partner has a 50% stake.

“The wind parks in this joint venture are attractive and core infrastructure assets, providing long-term cash flow visibility,” said Jesus Olmos, the European head of KKR’s infrastructure business. “KKR aims to be an active investor across the entire energy spectrum, and this partnership with Sorgenia allows us to enhance our portfolio by investing in renewable energy, one of the most attractive and promising areas of infrastructure.”

“An alliance with a highly qualified and experienced investor such as KKR will enable the Sorgenia group to expand its presence in the French market and consolidate its position as a leading operator in the renewable energy sector,” said Mario Molinari, general manager of the developer. “In the wind energy sector the business plan of the Sorgenia group envisages an increase in its generation capacity in Italy and France from 234MW at the end of 2010 to over 450MW in 2016.”

The deal is expected to close in September.

Jess McCabe