Canadian energy group Northland Power is looking to sell a 49% stake in its 559 MW Spanish renewables portfolio, said sources familiar with the deal.

The Toronto-listed company has tapped RBC as financial advisor and is making initial preparations for the deal, with teasers yet to be issued, according to the sources.

Northland Power did not respond to a request for comment. RBC declined to comment.

The portfolio set to hit the market is made up of 33 operational plants including 435 MW of onshore wind, 66 MW of solar PV and a 50 MW concentrated solar plant, with the assets spread across Spain.

Northland Power bought the portfolio in 2021 from Plenium Partners’ fund Helia Renovables for an equity value of EUR 345m and an enterprise value of about EUR 1.1bn. A year later, it raised EUR 688m of 20-year loans from CaixaBank to refinance the assets.

In its 2023 report, Northland Power posted CAD 162.8m (EUR 110m) of adjusted EBITDA from its Spanish business, down 25% year-on-year due to lower wholesale electricity prices. This is still above the EUR 90m annual EBITDA average in the five years before the company bought the assets.

Sources said Northland Power is selling the minority stake to free up capital for new investments while keeping control of the assets.

The Canadian power producer has indicated in the past it intends to grow its footprint in Spain, for example, adding an EUR 200m accordion facility to the CaixaBank loan to fund new acquisitions.

Over the past year, Northland Power has also sold minority stakes in its 1.022 GW Hai Long offshore wind farm under construction in Taiwan, and in its ScotWind development portfolio in the UK.

In September, it also raised EUR 4.4bn of debt together with Polish energy group PKN Orlen to finance its first offshore wind farm in Poland, the 1.2 GW Baltic Power project.

Northland Power’s deal comes in a hot market for renewables assets in Spain, with Infralogic tracking at least 23 live large-scale M&A deals.

Brookfield is selling Saeta Yield, which owns about 1 GW of operational renewables plants in Iberia, while Plenium Partners is selling 436 MW of operational wind farms and Acciona Energia is divesting a 308 MW onshore wind portfolio.

Endesa, the Spanish subsidiary of Italy’s Enel, is also selling a 49% stake in a 2 GW portfolio of operational and under-development renewables plants in Spain, while considering a similar deal for a further 2 GW of assets. Portuguese energy group Galp is also selling a minority stake in a 1.6 GW renewables portfolio in Iberia.

Meanwhile, Canadian pension funds OTPP and PSP are considering selling their global renewables company Cubico, which has a significant presence in Spain.

In other recent major deals, Norwegian state-owned utility Statkraft bought Spanish renewable power producer Enerfin for an enterprise value of EUR 1.8bn, while Madrid-listed Iberdrola sold a 49% stake in a 1.3 GW renewables portfolio worth EUR 2bn to Norway’s sovereign wealth fund Norges Bank Investment Management. Last May, Ardian sold its 422 MW operational wind portfolio in Spain to Naturgy for EUR 650m.