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International investment company Babcock & Brown last month increased its wind project development portfolio to around 3000 MW across Australia, the US and Europe through the purchase of Portuguese wind and hydro company Enersis II SGPS SA. Including debt, Babcock and Brown says the deal is worth EUR 1 billion. It paid EUR 490 million for Enersis.

Under the deal, Babcock acquires some 620 MW of renewable energy projects in operation or under construction in Portugal, Spain and France, including 325 MW of wind . It also gains 360 MW of projects currently in the planning and permitting stage which are expected to be commissioned in the next three years, as well as "a significant pipeline of projects at an earlier stage of development."

The company plans to offload the assets after around six months. Most are expected to be sold to its own subsidiaries including Babcock & Brown Wind Partners (B&BWP), which in October became the first company to offer investment opportunities in an international portfolio of purely wind assets (“uåX˜äŠÊ˜·³Ç, November 2005). If all 325 MW of Enersis wind projects operating or under construction are sold to B&BWP they will take its operational wind station portfolio to around 1000 MW.

"The [Enersis] portfolio generates strong operating cash flow as well as providing growth potential through a development pipeline," says Peter Hofbauer of Babcock's global infrastructure and project finance division. He says Babcock & Brown has the "opportunity to add further value, disaggregate the portfolio and ultimately offer investors the opportunity to invest in these quality assets."

Antonino Lo Bianco of Babcock & Brown's European Infrastructure team is confident the firm can build on the success of Enersis, noting the acquired portfolio is spread across markets which are strategic targets for Babcock & Brown's renewables businesses. Enersis is forecast to report sales from operating assets totalling EUR 44 million for 2005, up from EUR 33.4 million in 2004, while earnings before interest, tax, depreciation and amortization, are expected to come in at EUR 37.5 million compared to EUR 28.8 million in 2004.

Enersis was previously owned 89.92% by Semapa SGPS SA, a listed Portuguese company with interests in paper and cement, with the balance of shares held by Astural (9.41% ) and Sonagi SGPS (0.67%). The total purchase price has been funded from a combination of Babcock & Brown's existing debt facilities and an acquisition finance facility provided by Banco Espirito Santo. In addition, Babcock & Brown is assuming existing non-recourse project debt of around EUR 600 million.