Short list: M&A Deal of the Year 2020
Power Finance & Risk is pleased to announce the short list for the following award: M&A Deal of 2020.
It was a challenge to narrow down the field in an extremely active M&A market, but we have shortlisted five transactions. Please let us know if your firm is missing from the credits.
NextEra Energy/ KKR & Co
An investor consortium led by KKR & Co orchestrated two complex and separate transactions with NextEra Energy Resources (NER) and NextEra Energy Partners (NEP) to acquire a significant interest in a roughly 1,625 MW portfolio of utility-scale wind and solar projects across the US. One transaction was funded in part with a private placement and the other was partially funded with financing from a syndicate of commercial banks, with KKR investing about $1.4 billion across both deals. NEP will use the funds to buy contracted assets from its affiliated developer, NER, while the latter separately sells direct stakes in several of the projects to the KKR-led group.
The deal closed on December 18, 2020. Coverage here.
Sponsor: NextEra Energy
Investor consortium: Led by KKR & Co and includes Healthcare of Ontario Pension Plan, the CAAT Pension Plan and Varma Mutual Pension Insurance Co
Deal value: $1.4 billion
Counsel to KKR & Co: Kirkland & Ellis
Sunrun/ Vivint Solar
Sunrun’s all-stock acquisition of residential solar provider Vivint Solar for $3.2 billion created a combined company with more than 3 GW of solar capacity and over 500,000 customers. By the time the deal closed, the new company’s estimated enterprise value had grown by about 2.5 time from $9.2 billion in July 2020 to $22 billion in October 2020. The deal was the first and only public-to-public M&A deal in the pure-play US residential solar market at the time and was transacted following the COVID-related shutdowns last spring.
The deal closed on October 8, 2020. Coverage here.
Seller: Vivint Solar
Buyer’s financial adviser: Credit Suisse
Buyer’s legal counsel: Cooley and Axinn, Veltrop & Harkrider (antitrust)
Lead financial adviser to seller: Morgan Stanley
Financial adviser to seller: BofA Securities
Legal counsel to seller: Simpson Thacher & Bartlett and Wilson Sonsini
Ares Management Corp closed the sale of the largest single-phase and single-site wind project in the US, the 525 MW Aviator Wind farm in Texas, over the summer of 2020. The sponsor navigated pandemic-related turbulence to ultimately sell the mammoth project to two buyers, Japanese utility Kansai Electric Power Co and US utility CMS Energy. The project has corporate power purchase agreements in place with Facebook and McDonald’s USA.
The deal closed in July 2020. Coverage here.
Sponsor: Ares Management Corp
Deal value: $700 million
Buyers: Kansai Electric Power Co (51%), CMS Energy (48.5%)
Legal counsel to Ares: Latham & Watkins, Husch Blackwell
Legal counsel to Kansai: Norton Rose Fulbright
Legal counsel to CMS: Pillsbury
At the end of 2020, distributed energy and grid solutions provider Swell Energy secured $450 million from Ares Management Corp and Aligned Climate Capital to build four virtual power plants – comprising over 200 MWh of distributed energy storage paired with 100 MW of solar capacity – as well as other distributed energy projects across the US. The financing vehicle was structured to capitalize on Swell’s utility contracts and VPP capacity payments, representing a first-of-its-kind financing for residential solar-plus-storage virtual peaking power plants. On top of that, Ares’ investment in the financing vehicle was paired with tax equity from US Bank and a back-leverage facility totaling $70 million.
The deal closed on December 7, 2020. Coverage here.
Sponsor: Swell Energy
Deal value: $450 million
Cash equity: Ares Management Corp
Tax equity: US Bank
Sponsor’s counsel: Allen & Overy
Other legal advisers: Latham & Watkins, Nixon Peabody and Akin Gump
At the very start of 2020, Brookfield Renewable Partners announced its plans to buy up the remaining 38% stake in its yieldco, TerraForm Power, that it didn’t already own. It had originally acquired a majority stake in the listed renewables roll-up from its investors in 2017 following the SunEdison bankruptcy. The acquisition created a combined enterprise recognized as one of the largest integrated pure-play renewable power companies in the world, with assets totaling about $50 billion, a 15 GW development pipeline, and expected annual funds from operations of about $1 billion.
Sponsor: Brookfield Renewable Energy Partners
Deal value: $1.4 billion
Sponsor’s financial advisers: BMO Capital Markets and Scotiabank
Legal counsel to sponsor: Cravath, Swaine & Moore and Torys
Financial advisers to yieldco: Morgan Stanley and Greentech Capital Advisors (now Nomura Greentech)
Legal counsel to yieldco: Kirkland & Ellis and Richards, Layton and Finger