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Deal details: Under the agreement, Equinor will acquire the operational 200 MW Serra da Babilonia 1 wind farm, along with a 600 MW pre-construction solar PV portfolio and a 1.2 GW development pipeline. After the acquisition, the Rio Energy trade name will be fully owned by an Equinor subsidiary, in addition to ~140 of Rio Energy’s employees. The power generated by these projects will be managed in the Brazilian power market by Equinor’s wholly-owned energy trading house, Danske Commodities (DC). The projects that Equinor is acquiring are expected to provide a real base project return of ~4-8%, aligning with the company’s desired targets. Meanwhile, Denham Capital, the original backer of Rio Energy, will retain ownership in a significant portion of the company’s remaining portfolio, comprising ~500 MW of operational onshore wind assets, ~200 MW of projects in construction and ~400 MW of development pipeline.
Deal rationale: The deal aligns with Equinor's goal of expanding its business in onshore renewable energies within selected markets through the acquisition of local developers. This deal comes after the company's recent acquisitions of Wento in Poland, BeGreen in Denmark, Noriker Power in the UK, and East Point Energy in the US. Equinor aims to earmark over 50% of its CAPEX to organically develop its renewable portfolio, in order to achieve an installed renewable capacity of ~12-16 GW by 2030.
For Denham, the transaction represents a divestment of a major share of Rio Energy after holding the majority shareholder position for over 11 years. However, as part of the deal, Denham will retain ownership of over 70% of Rio Energy’s operational capacity, ensuring that the company maintains continued access to revenue streams. This will add to the platform's existing portfolio of ~12.8 GW of renewable and gas-fired generation capacity. In light of the sale, Denham will establish a new management team to oversee these retained projects, while the proceeds from the transaction will be directed toward funding the development and construction of the acquired pipeline projects.
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.
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