LONDON, UK: Kani Lux Holdings, a majority-owned subsidiary of ContourGlobal plc, has signed a definitive agreement with Pátria Investments to sell its Brazilian hydro power plants (Brazil hydro business) for a total cash consideration of 1.73 billion BRL ($313 million USD) including the assumption of net debt and other customary adjustments.
The transaction is expected to complete in 2Q 2022.
The Brazil hydro business generated 178.4 million BRL ($33.4 million USD) of adjusted EBITDA for the 12 months ended September 30, 2021.
The Company expects proceeds from the transaction net of tax and reflecting the Company’s underlying share of ownership of approximately $110 million USD.
The transaction creates compelling value for ContourGlobal shareholders with an implied valuation for the Brazil hydro business of 9.7x LTM Q3 2021 EV/EBITDA.
In 2021, ContourGlobal announced that it had started the process of monetizing its renewables business in Brazil, in addition to considering further transactions with respect to other renewable assets, in order to unlock value for shareholders and close the gap between its share price and the intrinsic value of the Company’s assets as valued by the private market.
The sale of the Brazil hydro business represents a first step in this direction and the Company expects to sell its wind power generation assets in H1 2022, and has granted exclusivity to Patria Investments to enter into a transaction for those assets.
The Company will determine whether to re-invest the expected proceeds into new growth opportunities or return capital to shareholders consistent with its capital allocation strategy and circumstances when the transaction closes, expected in Q2 2022.
Joseph C. Brandt, President and Chief Executive Officer of ContourGlobal, said: “We are pleased to have agreed the sale of our hydro assets in Brazil to Pátria Investments following a competitive process. Patria is the leading private equity investor in Brazil and has built an impressive business based upon careful long-term investing. They are a strong owner of this business.
This sale is consistent with our drive to unlock value from undervalued assets in our portfolio and deliver further attractive risk adjusted returns for our shareholders, and demonstrates that value differential for our assets in the public and private markets.”
The hydro assets in Brazil comprise nine run-of-river hydro-electric generating businesses operating under long-term contracts with 168MW of gross capacity. The assets in the portfolio were developed, constructed or acquired by ContourGlobal. As of September 30, 2021 the Brazil hydro business had a gross asset value of $105.4 million USD.
Patria Investments is a leading alternative investment firm focused in Latin America, with over 30 years of history and managing products across Private Equity, Infrastructure, Credit, Public Equities and Real Estate.
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