Italy’s Terna S.p.A has inked an agreement to sell its solar power unit, Rete Rinnovabile S.r.l., to Britain’s Terra Firma Investments for 670 million euros ($933.7 million).
Rothschild acted as the financial advisor, while Studio Legale Chionenti served as the legal advisor for the transaction.
The transaction, which is expected to be effective by March 2011, took into consideration photovoltaic plants that will benefit alternatively this year or early 2011 from the Conto Energia feed-in tariff program.
The Conto Energia legislation has set feed-in tariff rates for solar rooftops ranging from 1 kilowatt to 3 kilowatts at 0.402 euro per kilowatt-hour and 0.333 euro per kWh for solar rooftop projects bigger than 5 megawatts.
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These rates, which will apply during the first four months of 2011, are 9.3 percent and 14.2 percent lower than previous rates as Italy follows the trend across Europe to slash solar subsidies through feed-in tariff.
“We have completed an important transaction for Terna, the country and Italian electricity system. Indeed, in a very short timeframe, Terna management has been able to set up, develop and sell Rete Rinnovabile, which will be, at the closing, the number one photovoltaic player in Italy and among the largest in Europe,” said Flavio Cattaneo, chief executive of Terna, the Italian national grid operator.
He added that Rete Rinnovabile, with 150 MW of generating capacity, can boost Italy’s photovoltaic capacity by up to 10 percent, which is equivalent to reducing 135 kilotons of carbon emissions.
The terms of the agreement stipulates that Terna will provide Rete Rinnovabile with maintenance, surveillance and monitoring services for the photovoltaic plants. In addition, the company will regain ownership of each land after their respective leasing contract expires.
Rete Rinnovabile, which is operated by Sun Tegrid S.p.A., a wholly-owned subsidiary of Terna, develops and operates photovoltaic plants primarily inside or adjacent to Terna’s substations. The company owns solar plants under various stages of development across Italy.
Terra Firma Investments, a company controlled by Terra Firma Capital Partners III L.P., is one of the world’s top private equity firms. It has invested about 13 billion euros of equity capital in Europe and sealed a total of 43 billion euros in investments in energy and utilities sectors.
