Norway's wealth fund buys 49% stake in Iberdrola's Spanish renewables portfolio

The sun bathes an array of solar panels at a solar energy park in Saelices
The sun bathes an array of solar panels at a solar energy park in Saelices, Spain, May 11, 2022. Picture taken May 11, 2022. REUTERS/Susana Vera

OSLO, Jan 17 (Reuters) - Norway's $1.3 trillion sovereign wealth fund, the world's largest, said on Tuesday it had agreed to buy a 49% stake in Iberdrola's 1.3 gigawatt (GW) portfolio of Spanish solar plants and onshore wind farms for 600 million euros ($650 million).

Iberdrola (IBE.MC) will remain co-owner and operator of the portfolio, Norges Bank Investment Management (NBIM), the operator of the Norwegian fund, said in a statement.

"The portfolio comprises seven solar plant projects and five onshore wind projects with an installed capacity of 1265 MW, equivalent to the annual electricity consumption of 700,000 Spanish households," NBIM said.

Iberdrola said the transaction values the assets at 1.23 billion euros, while a source close to the deal added that that represented 15 times their projected earnings before interest, taxes, depreciation and amortisation in 2025.

Solar plants make up 80% of the portfolio, while onshore wind accounts for the remaining 20%. Nine projects are currently under development, with completion expected in 2023-2025, it said.

With its sunny plains, fast-flowing rivers and windy hillsides, Spain aims to produce 67% of its electricity from renewables by 2026. Power companies from all over the world are investing in the country to build the infrastructure to reach that goal.

The transaction with Norges Bank is part of Iberdrola's plan to sell minority stakes in renewable developments to finance its 47 billion euro 3-year investment plan devoted to renewables and power grids.

It recently sold a 49% stake in an offshore wind farm in Germany for 700 million euros.

Iberdrola and Norges Bank opened the possibility to extend the deal to other assets in Spain or elsewhere, Iberdrola said in a separate statement.

This is only the second time the Norwegian wealth fund has taken a direct stake in a renewable project - the first was in a Dutch wind farm, jointly with Denmark's Orsted (ORSTED.CO), in 2021.

The fund's CEO has often said it is difficult to find the right such projects to invest in at the right price. Taking stakes in renewables projects is a new asset class for the fund, allowed by parliament in 2020.

Barclays and Baker Mckenzie acted as Iberdrola's financial and legal advisors and Clifford Chance and PwC advised Norges Bank, several sources close to the deal said.

($1 = 0.9233 euros)

Reporting by Terje Solsvik and Inti Landauro and Andres Gonzalez, editing by Anna Ringstrom, Kirsten Donovan

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