Investments in Brownfield assets
Ennova America’s business strategy aims to create value for investors by building a diversified portfolio of assets that is resilient to economic and political cycles, offers an attractive risk-return balance and is not dependent on a single sector or sub-sector.
Main characteristics of target assets
- Predictable cash flows and/or with diverse sources of income.
- Sound legal and financial structures both for the development of the project and in relation to its direct, alternate and/or guarantee source of payment.
- Stabilized assets with consolidated or growing demand that generate social benefits.
- Opportunities for improvement and/or optimization in its operation and maintenance.
Key elements for value generation
- Increase demand for assets with a revenue structure dependent on the number of users of the assets (user-driven payment models).
- Improve the cost structure through Contract Compliance & Optimization of asset operation and maintenance contracts.
- Increase the operational and administrative efficiency of the assets (including the human capital involved in these activities).
- Optimize the capital structure of the assets.
- To carry out extensions or extensions of concessions or public-private partnership contracts (period of validity; areas of service or services under concession; rehabilitation, modernization or improvement of assets, or other areas that allow increasing the number of users of the assets or the consideration received for the provision of services and availability of the same).
Asset identification
Criteria
Rational
Yields
Investments that offer an expected internal rate of return (“IRR”) of at least double digits in nominal terms.
Constant recurring revenues
Recurring income generates liquidity and stability, thus providing a solid basis for improving investment efficiency. Ennova America will seek to ensure that at least 60% of the income from the investment portfolio is constantly recurring.
Demonstrated experience
Invest in assets where you can hire an operator with solid proven experience in the industry.
Sustainable healthy margins
Cash flows derived from the assets will be positive and stable in order to protect against unforeseen operating problems and provide room for payment of obligations.
Transparency of information
Consistency of information from the first approach to the closing of the deal will be key to generating investment confidence.
Demand risk
Investments without demand risk (e.g., those backed by a “tolling” or “take or pay” type contract) will be favored. This provides a return on investment that does not depend on market fluctuations.
Source of payment
Priority will be given to investments that have a variety of direct, indirect and/or collateral sources of payment or that are backed by buyers or counterparties that are investment grade on a global scale.
