Information on the Target

The investment platform consists of two sites dedicated to the generation of renewable energy through the utilization of forestry and agricultural biomass. The initial investment is a 5MW biomass facility located in Gospić, Croatia, which became operational in 2021. This facility benefits from long-term feed-in tariffs and supply agreements, and it includes a wood-drying facility that enhances the plant's efficiency.

Recently acquired is the green energy plant known as Elektrana Grubišno Polje (EGP) along with the adjacent drying facility named Sirocco, situated east of Zagreb. This site operates as a combined heat and power (CHP) system, also supported by long-term feed-in tariffs and supply agreements. The existing management team, led by Laurent Sessa, will continue to oversee the operations of the CHP plant as part of the transaction.

Industry Overview in Croatia

The renewable energy sector in Croatia is on the rise, with a national goal established under the 2030 National Energy and Climate Plan to generate 36.4% of its energy needs from renewable resources. This commitment reflects Croatia's dedication to environmental sustainability and energy independence, aiming to bolster its renewable energy production significantly over the next decade.

Within this framework, biomass energy plays a crucial role. The country's abundant agricultural and forestry resources provide a substantial basis for biomass energy production. This aligns well with the EU’s broader objectives for a greener economy and reduced greenhouse gas emissions.

Croatia’s energy market is also seeing an increase in investments and interest from various stakeholders, influenced by favorable policy measures and incentives for renewable energy projects. The shift toward renewable sources not only supports national goals but also encourages investments in local economies, driving job creation in the sector.

Additionally, as technology advances and efficient energy systems develop, the biomass sector in Croatia is expected to expand further. This growth is vital for achieving both energy security and environmental sustainability, presenting significant opportunities for investors and operators in the market.

The Rationale Behind the Deal

This acquisition represents a strategic move by Ancala to enhance its renewable energy portfolio in Croatia, doubling the capacity of its existing operations in the country. By acquiring EGP and Sirocco, Ancala aims to leverage the existing management's expertise and operational knowledge to accelerate growth and increase heat capacity.

The deal also allows Ancala to align itself with Croatia's ambitious energy goals, further underpinning its commitment to the energy transition. The long-term feed-in tariffs and supply agreements associated with the acquired sites mitigate financial risks, ensuring stable revenue generation.

Information about the Investor

Ancala Partners is an experienced infrastructure investment manager focused on critical infrastructure within the energy transition and renewables space. With nearly €1 billion invested in such projects, Ancala has a proven track record of identifying and supporting growth within its portfolio firms. This acquisition marks the firm's 15th bolt-on investment, showcasing its strategic approach to enhancing existing assets.

The company places a strong emphasis on collaborating with management teams to explore organic and acquisition-based growth opportunities. Their experienced team provides invaluable market insights and operational support to bolster the performance of their investments.

View of Dealert

This acquisition appears to be a solid investment opportunity for Ancala, given its potential to significantly enhance their existing renewable energy portfolio in Croatia. The alignment with Croatia’s long-term energy goals provides a favorable backdrop for growth, particularly as the country ramps up its renewable energy production.

Furthermore, the continued involvement of the existing management team ensures that operational expertise is maintained, fostering a smooth transition and ongoing growth strategy. Their experience in the biomass sector is likely to be instrumental in achieving operational efficiencies and increasing output.

Moreover, the long-term feed-in tariffs will offer a reliable revenue stream, effectively reducing risks associated with market fluctuations. In a time when investors are increasingly focused on sustainable assets, this deal positions Ancala favorably in a growing sector.

Overall, the combination of strategic location, experienced management, and supportive regulatory environment makes this deal highly advantageous and indicative of a judicious investment in the renewable energy landscape.

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