Aquila European Renewables (AERI) has agreed the disposal of its 18% minority stake in the Sagres hydropower asset in Portugal, in what marks the first material portfolio transaction since the company formally entered a managed wind-down.
The buyer is a group of co-shareholders in Sagres – funds also managed and advised by Aquila Capital – with the transaction subject to regulatory approval and expected to complete by June. The cash consideration of €16.5m is in line with the asset’s valuation at 31 December 2024, suggesting no discount was applied despite the minority nature of the stake.
This is a significant milestone in the company’s ongoing wind-down process, following the appointment of Rothschild & Co in October 2024 to advise on portfolio realisations. Shareholders had approved the wind-down in September after a prolonged discount to net asset value (NAV), limited secondary market liquidity, and growing pressure to return capital amid evolving investor sentiment toward closed-end funds in the renewable infrastructure sector.
Sagres background
Sagres is a run-of-river hydropower asset located in Portugal. While it benefits from strong operational performance and long-term power purchase arrangements, AERI’s interest was always non-controlling. That dynamic, combined with the concentrated ownership base and limited buyer pool, had the potential to complicate a clean exit. In that context, achieving NAV and an efficient execution timeline may be seen as a favourable result for shareholders.
Implications and outlook
While the board has cautioned that the remainder of the portfolio may not be as straightforward to exit – given the “uncertain and dynamic” state of the renewables market – the Sagres disposal sets a constructive precedent. Importantly, it also provides evidence that the board and its advisers are progressing with tangible steps in line with the wind-down strategy.
AERI’s remaining assets include stakes in wind and solar projects across Iberia and other parts of Europe. While some are expected to be more liquid or more attractive to strategic buyers, others may be more challenging to place, particularly if the current market backdrop persists.
Investors will now be watching for further updates on the timing and pricing of subsequent disposals, as well as clarity on how and when capital will begin to be returned.
[QD comment MR: This is a solid first step for AERI given that Sagres was arguably one of the trickier assets to exit – it is a minority stake, which could limit the buyer universe with higher risk for potential value leakage. Achieving a clean sale at NAV is encouraging and it also provides a degree of external validation for AERI’s NAV and its valuation methodology.
A common concern in the wind-down of alternative asset funds, particularly where assets are illiquid or privately held is that the NAV may be overstated. However, with a deal agreed at a level consistent with the end-2024 carrying value, this helps to reinforce confidence in the broader valuation of the remaining portfolio. That said, investors should temper their expectations. Despite the clear attractions of having reliable and predictable revenue streams with high degrees of inflation linkage, market conditions for renewable assets remain mixed, with rising interest rates, power price volatility, and regulatory uncertainty all weighing on valuations and appetite.
It may be the case that some assets may require more creative structuring and compromises on pricing or timing may be necessary. Still, this first transaction should give shareholders some comfort that progress is being made and that the board remains focused on maximising value.]
