3i Infrastructure gets binding offer for Valorem stake

3i Infrastructure said on Monday that it has received a binding offer for its circa 33% stake in Valorem, an independent European renewable energy developer and power producer, from funds managed by AIP Management P/S and from certain other co-investors.

Subject to acceptance of the offer and regulatory clearances, and following consultation with Valorem’s employee representative bodies, 3i expects the transaction to complete in the first quarter of next year.

3i said it expects to receive net proceeds of about €309m, which is an uplift of approximately 15% to its valuation of €268m at the end of March 2024, and 31% from the valuation as at 30 September 2023, before the sale process was initiated.

Proceeds will be applied to reduce the outstanding balance on the company’s revolving credit facility.

At the point of exit, 3i Infrastructure expects the investment in Valorem to have generated a gross annual internal rate of return of around 21% and around 3.5x gross money multiple.

Scott Moseley and Bernardo Sottomayor, managing partners and co-heads of European Infrastructure, 3i Investments, investment manager of the company, said: "3iN's strategy is focused on helping our portfolio of defensive businesses achieve strong growth as they leverage underlying structural drivers in their markets. Through this approach we are able to deliver long-term sustainable returns for our investors.

"Valorem is a great example of this. Over the last eight years, we have worked closely with the team to support the company's growth from a regional developer to an established leader in the European renewable power market.

"We will always be disciplined in our approach to value realisation and balance sheet management. This divestment provides us with the opportunity to crystalise a significant uplift to the carrying value, the proceeds of which will be used to reduce our drawings on our revolving credit facility."