First Reserve invests €300m in Abengoa

The private equity firm now holds a 15.9% stake in the company, which it may increas to 18.8% at a later date.

Abengoa approached the investor directly and was impressed by the "enormous enthusiasm and professionalism" it demonstrated throughout the sales process, which was run by Citi.

The investment is said to show endorsement for Abengoa's business plan and management, and the operational capacity of its team. The company is also a major player in several industries and geographies with which First Reserve is strongly acquainted, and is said to be ideally positioned to benefit from the global growth in energy infrastructure.

As part of the deal, Abengoa will issue 17.142 million new Class B shares, which will have a nominal value of €0.01 per share and pay the same dividend as the company's Class A shares. The voting rights will represent one hundredth of the rights of the Class A shares. The firm will also issue 4.020 million warrants for Class B shares with an exercise price of €0.01, which will allow First Reserve to acquire additional equity over the next five years.

The new capital will allow the company to reduce its corporate net debt from 3x EBITDA (or around €5.95bn) to 2.4x EBITDA. It may also be partly invested in infrastructure projects ranging from aluminium recycling and water desalination to power-transmission lines. Abengoa has not discounted the possibility of selling off one of its subsidiaries in future months to raise further funds.

First Reserve, which has financed more than 100 energy companies, plans to maintain its stake in Abengoa for two and a half years. After this time, it will either sell the stake or exchange it for Class A shares in the business.

The deal is scheduled to complete within the next month and is subject to regulatory approval in the US. The funding was channelled via First Reserve's most recent buyout vehicle, First Reserve Fund XII, which closed in 2009 at approximately $9bn.

First Reserve has a strong positioning within the energy sector, having invested more than €12.5bn in the industry. It maintains an active presence in a number of the countries and markets into which Abengoa hopes to expand.

Company
Abengoa provides innovative technology solutions for sustainable development in the energy and environment sectors across the world. It operates through its five business units – Solar, Bio-energy, Environmental Services, Information Technologies, and Engineering and Industrial Construction. It is listed on the Madrid and Barcelona stock exchanges.

Founded in 1941, Abengoa is headquartered in Seville and employs 23,000 people. The company generated revenues of €5.57bn and operating profits of €942.35m last year and is targeting a turnover of up to €6bn, with profits of up to €960m this year. By 2013 it expects its EBITDA to rise to €1.3bn.

People
William E Macaulay, chairman and CEO, represented First Reserve. Manuel Sanchez Ortega is the CEO of Abengoa, while Felipe Benjumea is the company's chairman.

Advisers
Equity – Citi (Corporate finance); DLA Piper (Legal).

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