The transaction values Enel’s Romanian business at an enterprise value of ~€1.9bn on a 100% basis, including debt of ~€0.6bn. Disbursement of the purchase price is subject to an earn-out mechanism for a potential additional payment, based on the future value of the retail business. The closing of the transaction is expected by Q3 2023. The move will help Enel target higher growth in countries where it has an integrated presence, namely Italy, Spain, the United States, Brazil, Chile, and Colombia. Enerdatics understands that PPC has been in discussions with four Greek banks - Eurobank, Alpha Bank ALFA, Piraeus, and Ethnik - to secure a 5-year, bullet loan facility, to finance the acquisition. The company is also likely to deploy ~€0.5bn of its cash-in-hand and a ~€0.3bn bridge-to-bond loan from international banks, with moderate refinancing risk.
Enel has been active in Romania since 2005, operating in power distribution and supply, as well as renewable energy, which includes more than 500 MW managed by Enel Green Power Romania. The group has three Romanian distribution companies, serving a total of over 3 million customers. Enel Romania also operates in-home services, distributed generation, energy efficiency, and in the e-mobility segment.
Fitch has affirmed that the transaction is credit-neutral for PPC, with Long-Term Issuer Default Rating (IDR) and senior unsecured rating standing at 'BB-'. The agency stated that the transaction has an overall neutral effect on PPC’s business risk profile as it will accelerate renewables capacity and increase geographical diversification. Fitch expects a cumulative EBITDA contribution of €1.1bn from Enel Romania for 2023-2025, driven largely driven by an increase in renewables capacity from 0.5 GW to 1 GW. The agency affirmed that PPC’s project pipeline provides sufficient visibility to its renewable buildout plan, which will be backed by a €7bn capex plan during 2023-2025, of which 95% is growth-related (largely renewables). The agency estimates that Enel Romania will account for ~27% of PPC’s consolidated EBITDA by 2025.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.