Grenergy Shares Soar with Sale of Atacama Project

Investing.com -- Grenergy Renovables shares rose 17% after the company announced that it had sold the first, second, and third phases of the Atacama solar plus battery project to ContourGlobal, a KKR company, for a total of USD 962 million. This strategic move, which also includes an additional USD 50 million in gains, is seen as a positive step toward strengthening the company's finances and has been well received by investors.

The sale of the first two phases for USD 490 million and the third phase for USD 472 million corresponds to an aggregate 1.55x enterprise value/invested capital (EV/IC) multiple. Grenergy anticipates approximately €100 million in capital gains in the fourth quarter of 2024 and an additional €200 million in 2025. Additionally, the company expects to receive USD 9.4 million from the pre-financing sale of phase 3.

This transaction, along with a previously made agreement with Allianz that has an enterprise value of €270 million and over €80 million in gains, will reduce Grenergy's net debt/EBITDA ratio from approximately 18x to about 1x on a pro forma basis. The company also retains roughly 80% of the remaining portion of the Atacama project, which includes a capacity of 1.5GW and 8.6GWh, and further project financing and power purchase agreement (PPA) announcements are expected soon.

RBC analyst Fernando Garcia commented on the deal: "Grenergy's divestment of phases 1-3 of Atacama is the largest solar plus battery transaction in the world and is an extremely profitable agreement executed at a 1.55x EV/IC." This divestiture also alleviates concerns regarding Grenergy's balance sheet that emerged after the company's results for the third quarter of 2024. According to Garcia, this agreement reinforces the belief that 2025 will be a significant year for battery technology investments and demonstrates Grenergy's readiness to take advantage of its strengthened balance sheet and the numerous investment opportunities in the sector.