EFG Hermes buys stake in French wind farm

EFG Hermes, Egypt’s largest listed investment bank, has signed a US$208 million deal to acquire 49 percent of the French wind energy company EDPR France.

This is EFG Hermes’ first investment outside the borders of the MENA region, and marks the beginning of a new investment strategy for the firm’s private equity division.

“Our interest in infrastructure investing generally — and in renewable energy in particular — reflects our aim to be catalysts for sustainable development, while simultaneously generating attractive returns for our shareholders and co-investors alike,” EFG Hermes’ Co-Chief Executive Officer Karim Awad said in a Wednesday press statement.

The deal is EFG’s second foray into the wind energy market in the past year, following an earlier commitment via the InfraMed fund to the establishment of the Arab world’s first utility-scale wind farm in Jordan.

Under the agreement with EDPR, EFG Hermes’ private equity arm will manage the investment, while the French company will keep operational control of the firm’s 33 wind farms.

With energy sales to France’s state-owned electric utility guaranteed by a 15-year feed-in tariff agreement, the investments are secure, said Karim Moussa, Head of Private Equity at EFG Hermes. “EDPR France’s asset portfolio offers a strong dividend stream and healthy risk-adjusted returns for the investors.”

In mid-September, Egypt issued its own feed-in tariff, which it hopes will lure private and international investors into a domestic renewable energy sector. However, the legislation is still incomplete, and investors have expressed skepticism about whether the proposed rates will ensure healthy returns.

In the meantime, Moussa recently told Bloomberg News today that his company is seeking other European infrastructure projects to invest in, claiming that such investments are hard to find in the Middle East.