Augusta, which has managed transactions to an aggregate value of over €10bn throughout Europe, highlights in its report the limitations of an insular approach, whereby Spanish asset owners selling on projects are choosing to engage in bilateral discussions with familiar investors, rather than seeking to broaden the pool of prospective buyers – both domestic and international – via a Structured Sales Process.
“Spain is currently a hotspot for European renewable energy, and has recorded a huge amount of deal flow over the past 18 months, demonstrating considerable investor appetite,” said Axel Narváez, Managing Director, Head of Spain, Augusta & Co.
“In order to sustain this momentum, however, and for owners to unleash full value from their development and operational projects, the market needs to ensure that it is open to and bringing on board the investors that are the best fit for these assets.”
Undoubtedly, a structured sales process benefits advisory firms, such as Augusta, but equally, advisors can offer an international network and a more diversified investor pool, whereby developers and IPPs in Spain can then mitigate the risks inherent in dealing with a single party, and ensure that they achieve a fair sale value.
“These bilateral discussions limit the value that sellers can unlock from their assets, often allowing buyers to take the upper hand and dictate pricing. They are also leaving sellers vulnerable to complexities or weaknesses in the eventual Sales Purchase Agreement with respect to factors such as warranties or financial penalties,” said the report.