Qatar funds RWE’s $6.8bn inexperienced power deal in US

RWE is doubling down on the world’s second-biggest renewables market with the acquisition of a portfolio of US photo voltaic parks and wind farms from Consolidated Edison Inc in a $6.8bn deal funded by Qatar.

RWE late on Saturday night time introduced that it was buying the inexperienced power arm of its New York-based peer. The transaction, which is among the largest inexperienced offers in US historical past, shall be funded by Qatar’s sovereign wealth fund, which is offering €2.4bn of money and can take a 9 per cent stake within the German firm in return.

The funding shall be supplied by a compulsory convertible bond that can flip the Qatar Funding Authority into RWE’s single largest shareholder.

Qatar already holds stakes in Volkswagen and Porsche, whereas the nation’s royal household is the only largest investor in Germany’s largest lender, Deutsche Financial institution.

RWE has been the nation’s best-performing blue-chip over the previous 12 months, with income buoyed by giant rises in electrical energy costs as a result of Europe’s worsening power disaster within the wake of Russia’s invasion of Ukraine. In July, it raised its revenue outlook by greater than third.

Over the previous yr, shares in RWE are up 24 per cent whereas the broader German market has misplaced 21 per cent throughout the identical interval.

Chief government Markus Krebber mentioned the deal was a “main enhance” for RWE’s carbon-free power enterprise within the US, the place the German group will turn out to be the fourth-largest renewables participant. Krebber mentioned that the area was “one of the enticing and fastest-growing markets for renewable power”.

Consolidated Edison mentioned that it will abandon a beforehand deliberate $850mn capital improve, including that it’s going to proceed to make “vital investments” in inexperienced power tasks in New York.

The acquisition, which is able to imply 500 workers switching from Consolidated Edison to RWE, virtually doubles the German group’s inexperienced electrical energy technology capability within the US to 7 gigawatts. RWE’s improvement pipeline will develop to 24 gigawatts. After the deal, photo voltaic will account for 40 per cent of the group’s US portfolio, in contrast with simply 3 per cent in the intervening time.

The photo voltaic parks and wind farms acquired from Consolidated Edison presently generate $600mn in earnings earlier than curiosity, tax, depreciation and amortisation. Together with debt, RWE is valuing the brand new belongings at 11 occasions ebitda together with debt. The German group mentioned it will proceed to pay out a dividend of a minimum of €0.90 per share because the transaction shall be earnings accretive from yr one.

Traditionally, RWE has been one in every of Europe’s single largest carbon dioxide emitters because it owns lignite mines and coal-fired energy crops in western Germany. The Essen-based group says it desires to be carbon-neutral in underneath 20 years and plans to speculate €50bn in inexperienced power by 2030, with Krebber saying the corporate is dedicated to be “one of many world’s main drivers of the worldwide power transition”.

Final yr, RWE’s carbon dioxide emissions rose 24 per cent, based on its sustainability report. Germany is bringing outdated, idled coal-fired energy crops again on the grid because it braces for potential power shortages in the course of the winter if Russian gasoline deliveries are halted.