Target Information

Foresight Energy Infrastructure Partners S.C.Sp and JLEN Environmental Assets Group (UK) Limited have jointly acquired a 90% equity stake in Energie Tecnologie Ambiente S.r.l. (ETA). Both Foresight and JLEN each hold a 45% share, while the seller, Marcegaglia Investments S.r.l., retains a 10% equity stake. This acquisition involves an investment of €53.5 million and is expected to complete by the end of May 2021. Located in the Apulia region of southern Italy, ETA is operational since 2012 and hosts a 16.8MW energy-from-waste (EfW) power plant.

The plant processes Refuse Derived Fuel (RDF) from household waste and generates approximately 126,000 MWh of electricity annually—enough to power around 35,500 homes. By processing about 137,500 tonnes of waste each year, ETA plays a critical role in diverting waste from landfills, thereby contributing to local waste management initiatives.

Industry Overview

The energy-from-waste sector in Italy has experienced substantial growth in response to increasing waste generation and burgeoning environmental regulations. As the country aims to transition toward sustainable energy sources, the EfW plants are becoming essential in managing non-recyclable waste while simultaneously generating renewable energy. The Italian government encourages investments in waste management technologies through various incentives, which further augments the sector's robustness.

Italy's commitment to enhancing its circular economy is evident through various legislative measures that emphasize waste reduction and energy recovery. These policies not only facilitate better waste management practices but also align closely with Italy's broader environmental goals, including achieving emission reductions and transitioning to low-carbon energy sources.

Moreover, the EfW industry contributes to the local economy by providing jobs and fostering technological advancements. With a growing number of plants being developed, the industry is evolving, showcasing innovative processes and technologies to enhance efficiency and output. As public awareness concerning waste management increases, the demand for such facilities is likely to continue expanding in the coming years.

Rationale Behind the Deal

The acquisition of Eta is a strategic move for Foresight and JLEN as it marks their entry into the Italian energy-from-waste sector. This investment aligns with their objective to diversify their portfolios while contributing to the transition to a low-carbon economy across Europe. The combination of various revenue streams at ETA, including gate fees and incentives for sustainability, reduces financial risk and enhances long-term profitability, making it an attractive investment opportunity.

Furthermore, the energy production from waste aligns with EU regulations and initiatives that endorse clean energy generation and waste management. Such investments reflect the growing trend among institutional investors to target projects that not only promise financial returns but also contribute to environmental sustainability.

Investor Information

Foresight Group Holdings Limited is a publicly listed investment manager specializing in infrastructure and private equity. With over 35 years of experience, Foresight manages assets exceeding £7.0 billion across various funds, including a diverse range of renewable energy projects globally. The firm's dedicated Italian team played a crucial role in finalizing this acquisition, ensuring efficient management of the asset and adherence to sustainability practices.

JLEN Environmental Assets Group Limited, an environmental infrastructure investment fund managed by Foresight, focuses on investing in assets that produce renewable energy and support sustainable practices. With a proven track record in bioenergy, JLEN’s investment in ETA signifies its commitment to expanding its operational footprint in environmentally beneficial sectors.

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The joint acquisition of ETA by Foresight and JLEN represents a strategic investment in the growing energy-from-waste sector in Italy. With the increasing regulatory emphasis on sustainability, such projects are set to gain further importance. The investment offers a unique opportunity to engage in a critical area of waste management while capitalizing on the financial benefits of diverse revenue streams that mitigate risks.

Moreover, ETA's operational stability and capacity to process significant amounts of waste into energy align well with market demands and sustainability goals. Considering the consistent growth trajectory of the waste management sector in Italy, this investment appears timely and well-positioned to generate favorable returns.

In conclusion, this joint acquisition not only enhances the portfolios of both investors but also contributes positively to local sustainability efforts. The effective management of the asset, backed by the expertise of Foresight and JLEN, signals a promising future for ETA in the evolving energy landscape.

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