S&P gives Amara, notes B

S&P said it preliminarily assigned B ratings to Amara NZero (Green Bidco SAU) and its planned €270 million of green notes. The preliminary 3 recovery rating on the notes indicates meaningful recovery prospects (50%-70%; rounded estimate 55%) in default. The outlook is stable.

“Our preliminary B rating captures the creation of holding company Green Bidco SAU by private equity firm Cinven in April 2023 to acquire 63% of Amara in April 2023,” S&P said in a statement.

Amara's existing shareholders and management will keep about 37% ownership. To finance the deal, Green Bidco will sell €270 million of five-year green senior secured notes, supported by a €50 million super senior secured revolver. Cinven and rolling existing shareholders will contribute €545 million in equity, largely in preference shares.

“We project that growth will continue from favorable regulations and incentives to meet the ambitious net zero emissions targets, particularly in Europe. These regulations, alongside higher energy costs, are driving corporate and residential investments in renewable energy installations like solar and wind. We see this growth, mostly organic, in the jump in Amara's revenue to €732 million in 2022 from €244 million in 2020. We forecast a strong revenue growth of about 29% in 2023 as the company scales up its solar energy operations in Spain, Brazil, and Mexico. We also expect the company, in line with the industry, to exhibit healthy mid-single-digit growth in 2024-2025.

“Despite Amara's strong relationships with its suppliers, concentration is a key constraint to its business risk profile, in our view. The major proportion of Amara's purchases originate from China (in line with the market) and its top-five suppliers accounted for about 62% of total supplies in 2022,” S&P explained.

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