VH Global Sustainable Energy Opportunities (GSEO) has announced that it has made a $63m commitment to fund the construction of 18 remote distributed solar generation projects across ten Brazilian states with a total capacity of 75MW. GSEO says that the fully-equity funded projects are at the ready-to-build stage and are expected to be operational in less than six months from investment. Once operational, the expected annual returns will exceed GSEO’s target annual dividend yield of 5% and total return of 10%.
The projects involve building solar PV farms to supply energy to creditworthy commercial and industrial energy users, as well as large multinational corporations with operations in Brazil. About half of the total production capacity is to be contracted with a multinational telecoms company. The lengths of the contracts will be 20 years on average and will be inflation-linked. Approximately 37% of the net proceeds raised on IPO are currently committed to the Enhanced Pipeline Assets.
Funding requirements
An initial tranche of $4m will fund the construction of four projects across Rio de Janeiro, which once operational will provide 5MW of energy to a combination of local communities and regional utilities. The initial tranche will be followed by a second $24m tranche in June to fund up to eight projects across Sergipe, Rio Grande do Norte, Paraiba, Mato Grosso do Sul, Piaui, Bahia and Para, which will provide 28MW of energy. The remaining $35m will then be deployed by August across Rio de Janeiro, Minas Gerais, Bahia and Sao Paulo to build six solar projects which will generate 42MW of power.
Proven partner and sustainable investment
GSEO is partnering with developer Energea Global LLC, which it says has a proven track record in developing and operating distributed power generation assets in Brazil. GSEO also highlights that Brazil is a Key Partner of the OECD and one of the world’s fastest growing energy markets.
An independent assessment of the project, as per the process, has concluded that it is compliant with the Company’s six relevant Sustainable Development Goals – goals 3, 7, 8, 9 13 and 17 – and will do no significant harm in the context of the remaining eleven goals.
The aim of this investment is to support and accelerate the growth of a sustainable energy system in Brazil by improving and securing localised access to clean energy and helping to lower Brazilian energy prices.
Comments from Eduardo Monteiro, Co-Chief Investment Officer of Victory Hill Capital Advisors LLP, GSEO’s investment adviser
“As promised to investors, this funding commitment marks the beginning of a very exciting journey for the Company in Brazil, where we can support real and lasting improvements in the country’s energy infrastructure. Brazil is experiencing rapid growth in its energy sector and there is significant potential for investors with the right expertise to help contribute to the country’s growth with cleaner and reliable sources of power.”
Comments from Mike Silvestrini, Managing Partner at Energea
“Brazil is one of the most exciting markets in the world when it comes to distributed generation and we are proud to have the backing of an experienced team at Victory Hill to develop further distributed solar power generation across the country. Right now, Brazil has the attractive combination of enabling policy landscape, strong energy economics and high degrees of customer adoption, marking it as a prime opportunity for investors looking to have a positive impact on the world and help battle the climate crisis.”