INTERVIEW - Solar World Invest seeks 16% return on investment in Bulgaria, eyes Romanian market

Solar World Invest, a Luxembourg-based private equity fund, is looking for a 16% return on investment in Bulgaria, where it recently closed a double acquisition, a fund official told SeeNews.

Last month Solar World Invest acquired from China’s ReneSola two photovoltaic plants in Sliven, southeastern Bulgaria, with a capacity of 5.0 MW and 4.7 MW, respectively. The price of the deal was not disclosed.

"For the first two years the fund, which was set up only last year, aims to acquire only operational installations with an existing track record and cash flow as this means less risk for us as an investor," Aubry De Koster, investor relations officer at the fund, told SeeNews in a recent interview. "However, next year we plan to go further and add ready-to-build projects, which have higher expected return but, of course, the risk too is higher."

The fund, which expects to increase its investment portfolio to 15-20 million euro ($17-23 million) by the end of the year from 7 million euro presently, is exploring investment opportunities in Romania, the official also said, without disclosing details.

Diversification and seizing good opportunities are the key elements of the fund's strategy. However, when considering whether to invest in a country, the fund is also looking at the interest rates and the stability of the local currency, he added.

In Bulgaria the fund is looking for projects established in 2011-2012, with a lifespan of 20 years, and the credit risk too needs to be considered, De Koster said.

“Risk in Bulgaria is higher than in let’s say Belgium […] you have the risk of retroactive policies too which could impact your return,“ he commented.

"On the other hand, the currency risk in Bulgaria is under control because of the fixed parity between the local currency, the lev, and the euro. Furthermore, the country’s renewables market is mature, having attracted a high volume of foreign investment over the past years, which means that expertise and highly-qualified staff which are crucial for due diligence are in place," he noted.

The combined capacity of power plants in Bulgaria using renewable energy sources that are planned to be connected to the national grid by 2024 amounts to 1,489 MW, the country's electricity transmission system operator, ESO, said last year. The share of renewable energy is seen at 14.91% of the overall consumption in 2015 while expected to exceed 19% in 2024.

($=0.8781 euro)

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