With firepower over 3 billion euros for new projectsthe largest and most efficient portfolio of concessions with guaranteed dividends of more than 10 billion euros and a construction backlog of more than 5 billion euros, arose the day after GEK TERNA, after the mega deal for the sale of TERNA Energy to Masdar.

Capitalizing on capital gains that he developed for over two decades in the field of Renewable Energy SourcesGEK TERNA, formalizing yesterday one of the largest business deals in the history of the Stock Exchange, with a total value of 3.2 billion eurosnow becoming the undisputed leader in the infrastructure and concessions industry.

The sale of 36.6% of TERNA Energy brings to the already very strong fund additional liquidity of 900 million euros (including the dividend for the year 2023). Taking into account the existing cash reserves of the parent company, the expected dividends from all the projects that are or will be put into operation in the next few years as well as the already secured extra leverage margins, the total investment power of the Group exceeds 3 billion euros.

Amount of 2 billion euros for new projects

Therefore, GEK TERNA is shielded with an arsenal of the most important additional equity of more than 2 billion euros exclusively for claiming new major infrastructure projects and concessions in Greece and abroad, since for all major projects in which the Group had already prevailed through international tenders (e.g. Attiki Odos, Egnatia Odos, New International Airport of Heraklion Crete, etc. .) eboth the financing lines and the participation itself were already securedbefore the deal with Masdar.

In addition, GEK TERNA acquires an even more attractive financial profile, since now are deducted from its total borrowing of approximately 1.1 billion euros, which related to financing lines of TERNA Energy’s intensive investment plan, and which are no longer included in the Group’s borrowing. As a result, the net borrowing of the Group (Pro-Forma) will be zero. Alongside, the parent company will now have a net cash of 500 million euroswhile all the remaining borrowing will concern the financing of concessions (mainly highways) without reduction to the parent company, i.e. projects that service their loans through predictable and stable cash flows over a period of 25-30 years from their revenues (tolls).

At a double-digit rate, the increase in profitability

However, in terms of profitability, compensation for the contribution of TERNA Energy is expected. In particular, profitability in terms of EBITDA and Net Income will continue to grow at a double-digit rate in the coming years from the operation of the Group’s new investments and will exceed 700 million euros of operating profitability within the next 5 years (2028).

As far as cash flows are concerned, the parent company from TERNA Energy received a dividend of 15-16 million euros every year. For 2023 the total dividends/returns of capital/repayments of intra-group loans exceeded 200 million (with TERNA Energy’s dividend representing less than 10% of total cash flows), an amount that is expected to increase in the coming years as the Group’s investment projects mature.

Checkmate movement in ideal timing

The sale of TERNA Energy is not an isolated move, nor is it simply a consequence of the opportunity to sell the “green” arm of the Group at an attractive price. On the contrary, it is part of a wider strategic plan that George Peristeris has been quietly implementing for years, with the aim of GEK TERNA evolving from the largest manufacturer initially and the largest producer of clean energy later, into a fully vertical group, with the largest and most diversified portfolio of infrastructure and concessions not only at the Greek level, but also at the European and international level. As the powerful man of the GEK TERNA group, G. Peristeris, stated during yesterday’s general meeting of shareholders, TERNA Energy “was, is and will be the company that proved that RES is the future of energy for our country”. while he revealed that the company had been the recipient of many different proposals in recent years.”

At the same time, the new growth story of GEK TERNA fully meets what the international investment community is looking for now: clear targeting, efficient structure, verticalization with competitive advantages in terms of construction know-how but also specialized knowledge in the design, financing, implementation and operation of large infrastructure projects, as well as sound fundamentals, based on strong fund, non-recourse borrowing and predictable, stable and strong cash flows over decades.

After all, the sale of TERNA Energy will allow the acceleration of the gradual increase of the dividend for the shareholders of GEK TERNA at higher levels, combined with the increase in operating profitability, which makes it even more attractive to large foreign institutional investors.

The mega play in infrastructure and concessions

GEK TERNA does this leap into the future precisely at the moment when the opportunity to invest in infrastructure in Greece and South-Eastern Europe crystallizes, with high returns, having already been strategically positioned in a sector where it has a competitive advantage, given its verticalization and its ability to control every stage of risk of the project. Based on recent studies (IOBE, PWC), in the infrastructure sector in Greece in the next few years, project auctions with a total value of 40-50 billion euros are expected. It is noted that similar positive perspectives are presented and in neighboring markets such as the Balkans and SE Europeas there is a significant need for key infrastructure and at the same time a strong will for significant investments with the aim of converging with the level of infrastructure in Western Europe.

The “aces” in waste and pumping projects

In the “fine” letters of the deal with Masdar, some “aces” are also hidden. Specifically, the agreement provides that only the activity of clean energy production is sold, and to GEK TERNA will pass a series of other activities that TERNA Energy had, such as waste management (e.g. in the Regions of Epirus and Peloponnese), i.e. activities that fit perfectly into the Group’s PPP/Concessions portfolio. Especially in waste management, it is recalled that in the coming years projects worth more than 2.5 billion euros are expected to be auctioned.

Finally, GEK TERNA will have the right to buy (call option) a percentage of 50% in specific energy production and storage projects (hydroelectric, pumped storage and offshore wind) with a total power of approximately 3.0 GW. The agreement also includes a put option regarding the Amfilochia pumped storage project, which provides that Masdar will have the right to sell to GEK TERNA 50% of the share capital of the company TERNA Energy – Pump Saving Sole Proprietorship (100% subsidiary of TERNA Energy) . In this way, GEK TERNA reserves the right for a very strong presence in emblematic energy infrastructure projects, of significant size and with a large construction object.