KKR offered Encavis shareholders a 54 percent premium to the undisturbed share price. It did so for a company whose EBITDA had fallen in 2023 and was expected to fall again in 2024, because wholesale power prices had dropped. The offer valued the German renewables producer at about $5.14 billion. The earnings multiple behind that number looks ordinary. The revenue multiple does not.
Key takeaways
- KKR, with Viessmann as co-investor, agreed on 14 March 2024 to take over Encavis, a Germany-based renewable power producer, at an enterprise value of about $5.14 billion, including an equity consideration of $3.06 billion.
- KKR's offer for Encavis was $19.13 per share in cash, a 54 percent premium to the undisturbed closing price and 33 percent to the three-month volume-weighted average price as of 5 March 2024.
- Encavis reported revenue of $491.16 million and EBITDA of $349 million for 2023, and expected EBITDA to decline in 2024 after lower wholesale power prices.
- Encavis' portfolio at the time of the KKR offer comprised 2.2 GW of operating capacity across more than 190 solar farms and more than 40 wind farms, plus 830 MW under construction.
- Enerdatics records the KKR and Viessmann takeover of Encavis as the largest disclosed corporate renewables deal in Germany across 2023 and 2024, at about 14.7 times 2023 EBITDA and 10.5 times 2023 revenue.
How did KKR structure the Encavis takeover?
KKR locked in a large block of shares before the public offer opened. Through its vehicle Blitz 21-823 AG, known as Elbe BidCo, it signed an investment agreement with Encavis and secured binding agreements with Abacon Capital and several other shareholders covering about 31 percent of the share capital. The offer then needed a minimum acceptance of 54.29 percent, counting the shares being sold and rolled over by those holders.
Two other terms lowered the risk for KKR. It did not need a domination and profit and loss transfer agreement, the German contract that lets a majority owner direct a subsidiary and take its profits, to finance the offer or meet its goals. And the Encavis board agreed in principle to support a delisting from the Frankfurt Stock Exchange after closing. KKR also committed to backstop any Encavis debt with change of control clauses, so lenders could not force a refinancing just because the owner changed.
KKR had used a similar sequence three months earlier in Portugal, where it signed private agreements to lock up most of Greenvolt before its takeover bid. Viessmann joined the Encavis consortium as co-investor, adding expertise and funding capacity.
What was KKR paying for in a company with falling earnings?
It was paying for contracted cash flow today and growth tomorrow. Encavis' operating fleet sells its output under guaranteed feed-in tariffs or long-term power purchase agreements, with on average about 12 years of feed-in tariff left and about nine years of contracts. A feed-in tariff is a fixed price per unit of power set by the state for a set period. That contracted base is why a drop in wholesale prices dented EBITDA rather than wiping it out.
The growth case is larger than the base. Encavis aimed to reach 7 GW of operating capacity in Europe by 2027, from 2.2 GW at the time of the offer. It had a 3.2 GW solar pipeline, and Enerdatics understands the remaining capacity was expected to come from wind. To source projects, Encavis ran a Strategic Development Partnership programme in which development partners build projects for it at a pre-agreed internal rate of return. If a project misses its target within a set time, the partner replaces it with another. That arrangement gives Encavis access to pipeline without carrying all of the development risk on its own balance sheet.
KKR said it would fund the pipeline, expand into new markets and invest in fast-track technology diversification. The 830 MW under construction and the partner pipeline are the bridge between the 2.2 GW operating at signing and the 7 GW target, and the price only works if a large part of that bridge gets built.
Is 14.7 times EBITDA expensive for a European renewables platform?
On earnings, no. On revenue, yes. At its structured value of $5,146.54 million, the takeover valued Encavis at roughly 14.7 times its 2023 EBITDA of $349 million and 10.5 times its 2023 revenue of $491.16 million.
Enerdatics' data shows where those multiples land. Across 2023 and 2024 Enerdatics records 207 corporate renewables deals in Europe. Fifteen carry an EBITDA multiple, with a median of 14.8x and an interquartile range of 10.9x to 17.8x, so Encavis sits almost exactly on the median. Twenty carry a revenue multiple, with a median of 6.83x and an upper quartile of 9.09x, so Encavis sits above three quarters of them. A high revenue multiple alongside a median EBITDA multiple is what a business with high margins looks like: Encavis turned about 71 percent of 2023 revenue into EBITDA.
On capacity, the picture depends on which megawatts are counted. Enerdatics' record divides the value by the 7 GW target, giving about $0.74 million per MW. Divided by the 2.2 GW operating base alone, the same enterprise value is about $2.34 million per MW. The difference is the pipeline, and KKR is paying for some of it up front. In Germany, Enerdatics records 31 corporate renewables deals across 2023 and 2024, of which 12 carry a value. Encavis is the largest, ahead of Asterion's $2.8 billion takeover of STEAG in August 2023.
What does the deal signal for European renewable platforms?
It signals that private capital will pay a full price for listed platforms when public investors are marking them down. The 54 percent premium shows how far the market price had fallen below what KKR thought the business was worth, at a time when lower power prices were eating into earnings. Encavis itself had been managing its existing assets actively, for example refinancing two operating Spanish solar parks and signing corporate contracts such as its ten-year PPA with Aliaxis in Italy.
The process ran to plan. On 25 November 2024 KKR said it had all regulatory approvals and had secured about 87.41 percent of outstanding shares, rising to about 87.73 percent after settlement, with delisting to follow as soon as legally and practically possible. Enerdatics records the transaction as completed on 6 December 2024. The test now is execution: whether the platform can get from 2.2 GW to 7 GW quickly enough to justify paying a median earnings multiple for earnings that were still falling.
Frequently asked questions
How much did KKR pay for Encavis? The takeover valued Encavis at an enterprise value of about $5.14 billion, including an equity consideration of $3.06 billion, with an offer of $19.13 per share in cash.
Who advised on the KKR takeover of Encavis? PJT Partners and Kirkland & Ellis acted as financial advisors and Latham & Watkins and Hengeler Mueller as legal advisors to KKR. Goldman Sachs and Lazard were financial advisors and CMS and Freshfields Bruckhaus Deringer legal advisors to Encavis.
What is Encavis' growth target? Encavis aimed to reach 7 GW of operating capacity in Europe by 2027, from 2.2 GW at the time of the offer, supported by 830 MW under construction and a 3.2 GW solar pipeline.
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