VH Global Sustain. - Acquisition of 198MW hydro facility in Brazil

VH Global Energy Infrastructure

31/08/2022 07:00

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RNS Number : 6660X  VH Global Sustainable Energy Oppt.  31 August 2022

VH Global Sustainable Energy Opportunities plc

31 August 2022

 

 

VH Global Sustainable Energy Opportunities plc acquires 198MW hydro asset in
Brazil

 

VH Global Sustainable Energy Opportunities plc ("GSEO" or the "Company") - a
London-listed investment company advised by Victory Hill Capital Advisors LLP
("Victory Hill") - is pleased to announce the acquisition of the Mascarenhas
Hydro Electric Facility ("Mascarenhas", the "Hydro Facility") in the state of
Espírito Santo, Brazil. The acquisition is for a total consideration of
BRL 1,225mn comprised of BRL 800mn on closing subject to adjustments. The
remainder is payable subject to the conditions established under the process
of renewal of the Hydro Facility concession in H1 2027. The transaction
closing is subject to customary regulatory approvals. This run-of-river
asset's nameplate capacity is 198MW and has been operational since 1974. The
Hydro Facility is being acquired from EDP Energias do Brasil S.A., a listed
company on the Sao Paulo Stock Exchange, one of Brazil's largest electric
utility companies and a subsidiary of leading European utility Electricidade
de Portugal S.A. (EDP).

 

Since it was first commissioned, the Hydro Facility has been maintained and
managed to a high standard. As a result, it offers a strong and sustainable
cashflow potential for GSEO with an estimated remaining useful life of 45
years. Over 60 per cent of the revenues are secured under long-term Power
Purchase Agreements (PPA) with local utilities. The energy regulator in Brazil
ranks over 140 hydro plants across the country, based on a number of factors
to assess their quality and operation. The Mascarenhas facility has been
consistently ranked as a top 10 hydro plant in the country.

 

The acquisition of the Hydro Facility adheres to the Company's renewable power
enablement strategy for Brazil. Brazil is an OECD Key Partner Country with the
largest power market in Latin America and a population of over 213 million
people. Brazil is also one of the largest hydro power markets in the world.

 

The Company will appoint Paraty Energia Ltda.("Paraty") as its local operating
partner in respect of Mascarenhas. Paraty will hold a minority equity position
and will receive performance incentives for their management of the Hydro
Facility. Paraty is an active participant in the Brazilian energy sector
specialising in energy trading, project advisory and operations. The company
was established in 2020 and has a strong operating track record.

 

An independent assessment of the Hydro Facility has concluded that it adheres
to the Company's six relevant UN Sustainable Development Goals - goals 3, 7,
8, 9 13 and 17 - and is doing no significant harm in the context of the
remaining eleven goals. The expected annual returns exceed the Company's
target annual dividend and total return.

 

 

Eduardo Monteiro, Co-Chief Investment Officer of Victory Hill, investment
adviser to the Company, said: "The acquisition of Mascarenhas marks our first
investment in hydro power and provides us with a highly reliable source of
power generation backed by long term secure PPAs. The preconditions to
enabling more penetration of wind and solar power capacity in the Brazilian
energy mix are well established and strongly underpinned by government
policies and the significant contribution of hydro power. Hydro power
generation is one of the oldest and most proven power generation sources,
complementing more intermittent renewable sources such as wind and solar and
ultimately facilitates the presence of such energy sources in the energy mix.
We look forward to working with the Company's new operating partners to
maximise the contribution of this asset to the portfolio."

 

 

Pedro Pileggi, Co-Founder and CEO of Paraty, said: "We are delighted to be
working with the Victory Hill Team on this project. We have attracted some of
the market's best hydro operators and will be retaining the experience and
expertise of the Mascarenhas facility's existing ground team of 22 people. We
are proud to be appointed for the operation of one of our country's most
established hydro power facilities and serving the communities that surround
it".

 

 

www.vh-gseo.com

 

The Company's LEI is 213800RFHAOF372UU580.

 

 

For further information, please contact:

 

Edelman Smithfield (PR Adviser)

Ged Brumby                      + 44 (0)7540 412 301

Kanayo Agwunobi           +44 (0)758 101 0560

 

Victory Hill Capital Advisors LLP (Investment Adviser)

Navin Chauhan                 info@victory-hill.com

 

Numis (Joint Corporate Broker)

David Benda                       +44 (0)20 7260 1000

Matt Goss

 

Alvarium Securities Limited (Joint Corporate Broker)

Mark Thompson              +44 (0)20 7016 6711

Eddie Nissen                     +44 (0)20 7016 6713

Oliver Kenyon                   +44 (0)20 7016 6704

 

G10 Capital Limited (AIFM)

Mohammed Rahman      + 44 (0)20 7397 5450

Paul Cowland

 

Apex Fund and Corporate Services (UK) Limited (Company Secretary)

Geetika Dayal                    +44 (0)7785 618 873

 

 

About Victory Hill Capital Advisors LLP

Victory Hill Capital Advisors LLP ("VHCA") (FRN 938594) is an Appointed
Representative of G10 Capital Limited, which is authorised and regulated by
the Financial Conduct Authority (FRN 648953).

 

Victory Hill is based in London and was founded in May 2020 by an experienced
team of energy financiers that have spun-out of a large established global
project finance banking group. The team have an established track record built
over six years while working together in their previous roles and
participating in over $37.1bn in sustainable energy project transaction
values, generating over 24.2 per cent. equity returns. In addition, the team
has also participated in more than $200bn in transaction values across 91
conventional and renewable energy-related transactions in over 30
jurisdictions worldwide, throughout their individual careers. The average
experience per individual is 22 years of relevant energy finance experience.

 

The VHCA team deploys its experience across different financial disciplines in
order to assess investments holistically from multiple points of view. The
firm pursues operational stability and well-designed corporate governance to
generate sustainable positive returns for investors. It focuses on supporting
and accelerating the Energy Transition and the attainment of the UN
Sustainable Development Goals.

 

VHCA is a signatory of the United Nations Principles for Responsible Investing
(UN PRI), the United Nations Global Compact (UN GC) and is a formal supporter
of the Financial Stability Board's Task-Force on Climate-related Disclosures
(TFCD).

 

 

END

 

 

 

 

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