May 2, 2018 / 11:02 AM / in 22 days

Reden looks to M&A to take advantage of France's solar push

PARIS (Reuters) - Reden Solar, a niche solar energy player backed by private equity funds, is looking to buy solar projects to take advantage of a government push to boost renewable energy in France.

FILE PHOTO: File photo shows a general view of solar panels used to produce renewable energy at the photovoltaic park in Cestas, France, December 1, 2015. REUTERS/Regis Duvignau//File Photo

France has been a laggard in renewables as its relies on nuclear for about three quarters of its electricity needs. But this could change now President Emmanuel Macron has made solar energy the focus of French renewable energy policies.

Against this backdrop, Reden hopes to grow quickly rather than risk being swallowed by big companies like Engie or Total.

“With the financial clout of our shareholders we can grow. If a company comes on the market, we could be interested,” Reden CEO Thierry Carcel said.

An IPO is a possibility, though there are no plans currently.

Based in Agen, southern France, Reden split off from renewables group Fonroche last year, when infrastructure fund InfraVia bought a 53 percent stake alongside listed investment company Eurazeo, which has 47 percent.

Reden has a 1.7 percent market share of France’s solar market, with 180 megawatts of installed capacity. This puts it in the top ten in a country where market leader EDF Energies Nouvelles’ 290 megawatt accounts for only about 4 percent of total capacity, according to consultancy Finergreen.

France had just 7.7 gigawatts (GW) of solar capacity installed at the end of 2017 - compared to Germany’s 43 GW.

But state-owned utility EDF plans to build 30 GW by 2035 and the French government has doubled tender volume for solar projects, sparking a race for size among the many small-to medium size companies in the industry.

“There are four to six significant players left in France, including Reden. The small ones will be eaten, maybe by Total, maybe by us,” said InfraVia CEO Vincent Levita.

InfraVia - which manages 1.9 billion euros ($2.28 billion) of assets - in 2016 sold stakes in solar firms Soparsol and Soley after holding on to them for about five years.

“We are ready to follow Reden if it makes acquisitions,” said Renaud Haberkorn head of Eurazeo Patrimoine, one of the funds under Eurazeo, which has 15 billion euros under management in total.

Finergreen CEO Damien Ricordeau sees rapid consolidation in the next year, with the top 20 solar firms capturing 50 percent of installed capacity.

“Things are moving fast, we expect 2-3 of the top 25 players will disappear by year-end,” Ricordeau said.

Since France’s energy giants have been slow to invest in solar, about the only way to catch up is through M&A.

Engie in 2015 bought Solairedirect. Total in September bought into renewables firm Eren and last month bought power retailer Direct Energie, which itself had just bought solar and wind firm Quadran.

Funds and foreign groups are also on the acquisition trail. Since October, Denmark’s renewable energy investment firm Obton bought Coruscant, Ireland’s power firm Amarenco bought Groupe Carré, and French solar firm Tenergie linked up with Credit Agricole.

Reden, which has equity of about 200 million euros, plans to double its installed capacity and has a pipeline of 350 MW solar projects in France and overseas.

Its overseas projects, mostly ground-mounted solar, include 60 MW in Mexico, 150 MW in Chile, 50 MW in Puerto Rico and last week it bought 50 MW in Portugal. In France it mainly puts panels on rooftops.

($1 = 0.8335 euros)

Reporting by Geert De Clercq. Editing by Jane Merriman

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