Iberdrola has signed a strategic agreement with the sovereign wealth fund of Singapore GIC for the development of transmission networks in Brazil for 2,400 million Brazilian reais (about 430 million euros), as reported by the company.

Specifically, both companies will co-invest in operational transportation assets (Jalapão, Santa Luzia, Dourados, Atibaia, Biguaçu, Sobral, Narandiba, and Río Formoso), which have a total of 1,865 kilometers of transportation lines and an annual return of 430 million Brazilian reais (about 77 million euros), with an average concession period of 25 years.

The group chaired by Ignacio Galán, through its subsidiary in Brazil (Neoenergia), will have a 50% stake in the company, valued at 1,200 million Brazilian reais (about 215 million euros). The operation has been carried out at a multiple of 13 times the gross operating profit (Ebitda).

In addition, both groups have signed a framework agreement to jointly participate in future tenders for electricity transmission assets in Brazil, including the auction scheduled for June 30, 2023. GIC thus becomes a preferred partner for assets under construction and upcoming auctions.

The alliance also includes the right to acquire a 50% stake in other assets in construction and operation (Itabapoana, Guanabara, Vale do Itajaí, Lagoa dos Patos, Morro do Chapéu, Estreito, Alto do Parnaíba, Paradise and Potiguar Sul), which encompasses 6,279 kilometers. The total annual remuneration of these assets is equivalent to approximately about 1.3 billion Brazilian reals (about 233 million euros).

Once the operation is executed, the Iberdrola subsidiary in Brazil will stop consolidating the debt of the operating assets, considered within the perimeter of the transaction.

This transaction is part of the non-essential asset rotation program, which has already been 100% fulfilled to support Iberdrola’s record investment plan of 47,000 million euros.

As part of its investment plan, approximately 27,000 million euros will be allocated to electricity networks worldwide, which will increase the value of network assets managed by the company to 56,000 million euros in the next three years. In addition, some 17,000 million euros will be allocated to the renewable business, in which it plans to increase its portfolio by more than 12,000 renewable megawatts (MW).

In recent months, the energy group has closed various long-term alliances, such as the agreement to sell more than 8,400 MW of gas combined cycles in Mexico, progress in its alliance with Mapfre, the agreement with BP to deploy 11,700 points of fast charging in Spain and Portugal, or that of Norges Bank Investment Management to co-invest in 1,265 MW of new renewable capacity in Spain, among others.