Italy’s leading wind power operator, ERG, and the Quercus Italian Solar Fund (QISF) managed by UK-based investment firm Quercus, have agreed to create the public limited company ERG Q Solar 1, which will aim to make investments in the Italian secondary PV market.
The new company, of which EGR and Quercus will own 60% and 40% stakes, respectively, is expected to acquire small solar parks no bigger than 1 MW in size in Italy, with a combined capacity of 150 MW by the end of 2021, the two companies said in a statement.
“Overall investments are envisaged during the next three years for a maximum amount of €350 million [$404 million], aiming for at least a low double digit equity internal rate of return, also thanks to the implementation of industrial and financial synergies,” added the announcement.
The new company will be incorporated by the end of next month under the terms of the agreement.
“Financial approach and industrial discipline will be increasingly the recipe for success, particularly as regards such a specialist market as that of small-scale solar power, where the presence of a local team like ours becomes fundamental at both negotiation and post-acquisition management stage,” said Quercus chairman Vito Gamberale.
ERG announced its plans to enter solar in Italy in November. At the time, its ERG Power Generation S.p.A. unit agreed to acquire ForVei, a joint venture between Italian investment firm VEI Green and UK-based Foresight, which owns 81 MW of PV power plants in Italy. The value of the transaction, also funded through non-recourse project financing of €180 million and lease agreements of around €60 million, amounted to around €336 million.