Brookfield Asset Management will take control of Spanish solar power developer X-ELIO, in the latest move by Canadian investors to increase exposure to the renewable energy sector.
The Canadian group bought the remaining 50 percent stake in the Spanish solar power group from US private equity firm KKR, the company said.
The deal gives X-ELIO nearly $2bn in equity, according to people familiar with the material. The investment comes as Brookfield raises funds that will target businesses that benefit from the shift to renewable energy.
“We see very strong dynamics in Europe,” said Ignacio Paz-Ares, head of European Renewable Power and Transition Investments at Brookfield Renewable.
On top of the regional decarbonization target, “you have the energy security target, so I think it’s just a matter of adding it and even making the government more focused on pushing the deployment of renewable energy,” added Paz-Ares.
Brookfield’s decision to bet on Europe’s renewable energy sector comes as the EU faces the threat of $369bn in green tax incentives and subsidies offered in the US under President Joe Biden’s Inflation Reduction Act.
Volkswagen, BMW and Enel are among the leading European companies to review renewable investment plans in the bloc in light of the IRA.
Brookfield previously raised $15bn in a fund led by former Bank of England governor Mark Carney, which supports the development of renewable energy alongside technologies such as nuclear and waste recycling. The group plans to raise a second fund with the goal of transitioning away from fossil fuels and aims to attract $17bn from investors, according to one of the people.
Brookfield takes full control of Madrid-based X-ELIO through Brookfield Renewable. Brookfield has backed similar companies in the US, acquiring Scout Clean Energy and Standard Solar last year.
X-ELIO was founded in 2005 and specializes in building, financing and operating solar plants, storage and hydrogen projects. In addition to Spain, the group is also active in the US, Italy, Australia, Japan and Latin America.
KKR first invested in X-ELIO in 2015, buying 80 percent of the company in a deal that gave the Spanish group a company value of around $1bn. Brookfield stepped in in 2019, buying out minority investors and part of KKR’s holdings to accumulate a 50 percent stake.
After exiting its investment in X-ELIO, KKR will retain exposure to renewable energy through a number of investments, including in French renewable energy producer Albioma and British company ContourGlobal.
The transaction is expected to close in the second half of this year.