M&A Activity • Jun 24, 2024
M&A Activity
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Norsk Hydro: Hydro and Macquarie formally begin renewable energy partnership
Hydro has completed the transaction for the sale of 49.9 percent of renewable
energy company Hydro Rein to Macquarie Asset Management.
The financial closing of the transaction that was announced in October 2023, is
an important accomplishment for the execution of Hydro's strategy to grow in
renewable energy.
"We are excited to conclude the transaction, marking the next chapter in our
renewable energy partnership with Macquarie Asset Management. Hydro Rein is well
equipped to execute on its ambitious growth agenda, with a strong project
pipeline going forward. Industrial decarbonization begins with renewable energy
and Hydro Rein will be instrumental in supporting Hydro as well as other
industries with the energy we need to reduce our CO2 emissions," says Hydro's
President and CEO, Eivind Kallevik.
The transaction values Hydro Rein at USD 333 million, per June 30, 2023, subject
to closing adjustments. Macquarie contributes USD 214 million of this amount at
closing. The funds will be transferred by June 25, 2024. The remaining part of
the committed capital will be contributed over time as the need arises.
The impact from the transaction will be recognized in Hydro's income statement
for the second quarter and excluded from "Adjusted results." With the capital
provided by Macquarie, Hydro Rein is expected to be fully funded for its current
projects under construction and development cost for projects in the pipeline in
the coming years, with an ambition that no new equity will be called on from the
owners beyond committed capital.
Hydro and Macquarie have a longstanding relationship within renewable energy.
The companies have collaborated on several projects since 2017, and have
developed 1.3 GW of renewable energy capacity, including several wind projects
across the Nordics and a 456 MW onshore wind farm in Brazil. These projects
include power purchase agreements with Hydro to help decarbonize its operations.
Hydro Rein has 8.4 GW gross capacity in development across its core markets in
the Nordics and Brazil. The company has developed strong industrial partnerships
since launching in 2021, and the projects Hydro Rein is engaged in have signed
long-term power purchase agreements totaling 5.3 TWh annually. This includes
offtake agreements with Hydro's alumina refinery Alunorte, primary aluminium
plant Albras and the bauxite mine Paragominas. Hydro Rein also co-developed a
wind project that provides clean electricity to power the Norwegian operations
of telecommunications company Telenor.
"Decarbonizing vital industrial materials like aluminium is a key challenge of
the energy transition. Hydro Rein is helping to pioneer low-carbon aluminium
smelting and is playing a leading role in enabling industries like the
automotive sector to reach its decarbonization targets. I look forward to
joining forces once again with Hydro, combining our capabilities to unlock a
greener future for industry, and the communities and markets served by
industry," says Mark Dooley, Global Head of Green Investments at Macquarie Asset
Management.
As of today, Hydro Rein is established as a joint venture (JV) where Hydro owns
50.1 percent and Macquarie 49.9 percent of the company. All of Hydro Rein's
assets in Brazil, Denmark, and Sweden, and all Energy Solutions projects, are
included in the joint venture. Hydro Rein's projects in Norway will also be
included in the joint venture, except for potential onshore wind projects
located close to Hydro's smelters, such as Snøheia Industrikraft. These projects
will continue to be developed and owned by Hydro together with local partners.
Hydro Rein's organization will support Hydro in developing these projects
through service agreements.
Investor contact:
Martine Rambøl Hagen
+47 91708918
Media contact:
Halvor Molland
+47 92979797
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