Aquila European Renewables slumps as sale process stalls

Aquila European Renewables (AERI ) has paused the planned sale of a significant chunk of its portfolio after a change of terms from its preferred bidder, in a fresh blow to shareholders hoping for progress on the trust’s managed wind-down. 

The £233m trust, with its European portfolio of onshore wind, solar and hydro assets, said it had been close to finalising terms with the bidder following ‘extensive negotiations’ which resulted in a ‘broadly agreed’ purchase price. 

However, a late revision of the offer from the buyer, reducing both the number of assets to be sold and their price, left the board concerned that proceeding would harm the marketability of the remaining portfolio. 

As a result, AERI has withdrawn exclusivity from the bidder and paused the sales process while it explores alternatives, although the board specified dialogue with the bidder ‘remains open’. 

The news follows AERI’s completion of the €15m sale of its Sagres hydropower asset in June and ongoing efforts to dispose of both its Finnish wind farm Olhava and other assets on a regional basis.

Winterflood’s Ashley Thomas commented that ‘while the Sagres disposal was achieved in line with valuation’, the broker had previously shared worries that ‘replicating this across wind and solar assets would be more challenging.’ 

He added that ‘the delay and likely lower valuation from this process could weigh on AERI’s already wide 27% discount.’ 

Deutsche Numis’ Colette Ord noted the sale process had already been ‘lengthy.’ 

‘Having previously entered into exclusivity in May with a preferred bidder to sell “the majority of its assets”, terms changed in June to “a substantial portion” and [are] now reduced further to a “less material portion,”’ she said.

Chair Ian Nolan acknowledged shareholders would be ‘disappointed’ with the update and recognised ‘the current challenging sales market environment with relatively low levels of liquidity and pressure on forecast power prices’.

He added: ‘We retain our view on the resilience of the portfolio and its operational performance, as evidenced by the positive due diligence process undertaken to date.’ 

AERI shares reacted negatively to news of the pause, falling 12.3% by 1.45pm on Monday afternoon.

The second quarter net asset value for the portfolio, incorporating updated and ‘lower’ European power price curves, will be released in early August.