Last Friday, Arise announced the acquisition of a 10 MW (22 GWh) wind farm in SE2, commissioned in 2009, for a purchase price of EUR1.2m. While the transaction is small in absolute terms, the implied valuation appears highly attractive and well below the book value per MW of Arise’s legacy wind assets. We view the transaction as a clear indication of depressed asset valuations and weak market sentiment in SE2 and SE1. At the same time, it highlights the opportunities that arise in such market conditions. We have been expecting this type of M&A activity for several years and view it positively that transactions are now beginning to materialise. Somewhat ironically, this occurs while Arise itself is subject to what we consider an undervalued takeover bid. The acceptance period for Aneo’s offer is expected to end on 30 December, and as discussed in our research note dated 27 November, we believe the offer does not fully reflect Arise’s underlying asset value and long-term earnings potential.
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