Engie finds a measured form of green pivot

Wind turbines used to generate electricity are seen near the village of La Mesa, Spain, August 11, 2017. REUTERS/Paul Hanna

LONDON, Nov 11 (Reuters Breakingviews) - Flush with cash from the 7 billion euro sale of its services business, French utility Engie (ENGIE.PA) has snapped up Eolia, a wind farm developer and operator, from Alberta Investment Management. Piling into renewables in Spain isn’t risk-free. The government is clawing back profits from energy groups to help consumers cope with high prices.

Still, given energy investors fret about the cost of green pivots, Engie Chief Executive Catherine MacGregor’s looks more measured. She is buddying up with Credit Agricole (CAGR.PA), which will own 60% of the company, while Engie will lock in contracts to develop and operate wind farms. As Eolia’s 1 billion euros of debt stays off balance sheet, the cost for Engie’s stake is just 400 million euros. The implied purchase price of 2 billion euros including debt is a not-too-rich 2 million euros per megawatt. Engie also gets a 1.2 gigawatt pipeline, boosting its strategy to grow its portfolio to 50 gigawatts by 2025. Including debt, Engie is valued at 5 times forward EBITDA, versus peers on 7 times, according to Refinitiv data. That suggests MacGregor’s strategy is still in progress. (By Neil Unmack)

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Editing by George Hay and Oliver Taslic

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