Grenergy Renovables Sees 17% Surge in Shares

Shares of Grenergy Renovables soared by 17% after 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 includes an earn-out of USD 50 million, positively impacting the company's financials and well-received by investors.

The sale of the initial two phases for USD 490 million and the third phase for USD 472 million reflects 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. The company will also receive USD 9.4 million from the pre-financing sale of phase 3.

This transaction, along with a previous deal with Allianz (ETR:ALVG) valued at €270 million, significantly reduces Grenergy's net debt to EBITDA ratio from around 18x to approximately 1x.

Grenergy 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 analyst Fernando Garcia remarked, “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 alleviates concerns about Grenergy's balance sheet that arose after the company’s third-quarter results in 2024. Garcia sees this as a reinforcement of the belief that 2025 will be pivotal for battery technology investments, with Grenergy ready to exploit its strengthened balance sheet and numerous investment opportunities in the sector.

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