EQT Active Core Infrastructure to acquire Tion Renewables, a renewable energy producer based in Germany
Boè TopCo GmbH & Co. KG (the “Purchaser”), a holding company owned by the EQT Active Core Infrastructure fund (“EQT Active Core Infrastructure”, or “EQT”), today announced that it has entered into a sale and purchase agreement with Pelion Green Future Alpha GmbH (“Pelion”, “Pelion Green Future”, or the “Seller”), an investment holding focused on clean energy. The acquisition of Pelion’s 71.7% in Tion Renewables AG (“Tion Renewables”, “Tion” or the “Company”) is for the benefit of Hopper BidCo GmbH (the “Acquirer”), a subsidiary of the Purchaser (the “Transaction”), which entered into sale and purchase agreements relating to an additional 10.4% in Tion. As part of the Transaction, the Purchaser, the Acquirer and the Company have signed an investment agreement (the “Investment Agreement”). Furthermore, Pelion will reinvest and enter into certain other commercial undertakings in connection with the Transaction, thereby indirectly remaining a minority shareholder in Tion Renewables in a strong signal of continuity.
The Transaction values the Company at a base equity value – representing 100% of the shares issued by the Company – of € 150 million, equaling approximately € 31.61 per share (the “Purchase Price”). The Purchase Price corresponds to a premium of around 35 percent over the closing share price of the Tion Renewables share in the electronic trading system (XETRA) of the Frankfurt Stock Exchange on 24 March 2023. However, it should be noted that the calculated premium is highly illustrative given the limited liquidity and trading volumes of the Tion Renewables share. Furthermore, the Purchaser has agreed to enter into an earn-out arrangement with the Seller concerning certain renewable projects (the “Earn-out”). The Earn-out is subject to the achievement of certain operational metrics, all of which are currently uncertain.
Tion Renewables, headquartered in Grünwald, Bavaria, is a renewable energy producer listed on several German exchanges in the Open Market segment (Freiverkehr). It has a well-diversified portfolio of utility-scale solar, wind and battery storage assets across the European Union and in the United Kingdom with a capacity of 167 MW and benefits from a strong development pipeline of additional solar, wind and battery storage projects.
The Company benefits from the global energy transition and ambitious renewable targets set by regulators globally, which are accelerating structural changes in the generation and storage of clean energy. Against this background, an Investment Agreement has been concluded between the Purchaser, the Acquirer and Tion that aims to support the Company to fully unlock its growth potential and become a leading platform for investments in energy transition projects, with a strong foundation of cash-generating operating assets. In addition to providing the Company with increased financial flexibility, EQT Active Core Infrastructure will support Tion Renewables’ transformation by leveraging EQT’s deep experience in the renewable energy space and offering access to its network of over 600 industrial advisors, while driving commercial and operational excellence.
Fabian Gröne, Partner within EQT Active Core Infrastructure’s Advisory Team, said: “Tion Renewables plays an important role in Europe’s energy market by producing over 300 GWh of green electricity every year. This acquisition, which is EQT Active Infrastructure’s second investment, is a prime example of the Fund’s purpose-driven and active investment strategy directly contributing to the energy transition and decarbonization targets. We believe it offers a distinct risk-return proposition with strong downside protection, stable cash yield generation and low volatility. We are convinced that Tion Renewables is on track to becoming a key contributor to the energy transition and look forward to supporting the Company on its next phase of growth.”
Jan Krüger, Partner at Pelion Green Future, said: “In EQT, Tion Renewables has found a highly experienced, reputable, and long-term partner, which will allow Tion to leverage Pelion’s and EQT’s strong track record in pushing the energy transition. We remain strong supporters of Tion and by remaining invested, look forward to continuing to support the Company on its path to becoming one of the champions of the global energy transition.”
Dr. Martin Siddiqui, Co-CEO and CFO of Tion Renewables, said: “Tion Renewables is thrilled to welcome EQT on board and we are excited that they will back our growth journey over the coming years. Together with EQT, we look forward to continuously expanding our platform by sustainably deploying solar, wind and battery storage projects in the years to come.”
Christoph Strasser, Co-CEO and CIO of Tion Renewables, further adds: “Joining forces with an investor like EQT – one that offers strong experience in the renewables space and has global reach – will help accelerate our journey to becoming a key player in renewable energy not only in Europe, but worldwide.”
The Management Board and the Supervisory Board of Tion Renewables support the conclusion of the Investment Agreement and are excited to welcome EQT Active Core Infrastructure as new majority shareholder and a partner.
Transaction details
The Acquirer supports the existing management of the Company and the current members of the Management Board will remain on board. Following the completion of the Transaction, the Acquirer shall be represented on the Supervisory Board. Given the Company is not listed on the regulated market, no public takeover offer is required in connection with the Transaction. As soon as practical, the Acquirer, however, would like Tion Renewables to pursue a delisting from all current stock exchanges and to apply for revocation from trading in the Open Market, to the extent feasible. A domination agreement is not required from a financing perspective given that the Transaction will be all-equity financed. Funding of the Company’s growth plans might entail future capital increases at the level of the Company.
As a consequence of the Transaction, the measures described in the announcement of the non-binding memorandum of understanding concluded between the Company and clearvise AG will not be implemented as originally intended.
The transaction is subject to the customary closing conditions, including receipt of applicable regulatory clearances as well as certain consents and waivers by Tion Renewables’ lenders with respect to potential existing change of control rights. It is expected to close in Q2/Q3 2023.
EQT Active Core Infrastructure was advised by BNP Paribas (financial) and Milbank (legal). Pelion was advised by Sullivan & Cromwell (legal). Tion was advised by Linklaters (legal).