Next round of Savion bids submitted as high comp valuations emerge

With funds ponying up massive premiums for independent renewable energy developers, it stood to reason that Kansas City-based developer Savion Energy might follow suit.

However, the jury remains out as potential bidders are being taken through management presentations with new bids that were due 12 November, said two sources familiar with the situation. There is a question about whether the US-based infrastructure funds who still haven’t acquired a renewable developer are willing to pay the premium, while others are viewing foreign strategics or investors as potential buyers, said two of those sources.

Savion Energy hired Guggenheim Securities and Macquarie Capital in August.

Following the submittal of first round bids in September, potential bidders were in the middle of management presentations.

At the same time, Ares Management and Antin Infrastructure Partners successfully acquired stakes in Apex Clean Energy and Origis Energy, respectively. Both buyers took a majority stake in each developer and at enterprise valuation levels north of USD 1bn, according to both sources familiar.

Separately, EQT Infrastructure closed a deal to acquire Cypress Creek Renewables, also earlier this month, at an enterprise valuation in the mid-USD 800m range, they said.

Savion, a portfolio company of Macquarie’s Green Investment Group, has a larger development platform then those three developers. It lists 12.5 GW of solar and 3.3 GW of energy storage under development and 2 GW of projects in solar and storage that have reached construction phase or are in operation.

Most of the developers being traded this summer had many of their assets in development, so there was no realizable EBITDA. However, what they found was an expanding pool of fund managers willing to buy these pipeline platforms for the potential at a higher return down the road as opposed to fully de-risked projects that went operational at a much lower return.

Valuations were predicated in areas such as the track record of management and their ability to deliver projects. Most of the deals involved sponsors taking a majority stake, while existing management would retain equity in the deal.

There are US-based infrastructure funds left who have not bought into a renewable platform. At the same time, there a foreign investors who have been active in the space as of late, including SK E&S, an affiliate of South Korea’s S&K acquiring Key Capture Energy and recently announcing an investment in LS Power-backed Rev Renewables which included battery storage, pumped storage hydro and wind and solar assets.

In March S&B USA, a subsidiary of Israeli-based Shikun & Binui agreed to acquire the 260 MW Brazoria Solar West project from Savion.

Savion declined comment on the situation. Guggenheim and Macquarie Capital did not return calls seeking comment.