Sirec Energy is a private equity firm that specialises in energy efficiency, circular economy and energy production from renewable sources. It is also the manager of EuSIF, in which it has participated with a significant portion of its own capital. Through EuSIF, Sirec Energy invests in projects focused on renewable energy production, energy saving and the cyclical economy.
EuSIF first closed in June 2021 with total commitments of €50 million. It has since developed a projects pipeline relating to energy upgrades and the repositioning of existing commercial buildings, as well as waste management, the development of solar and wind parks and the production of biofuels. Through its equity contribution, the fund is now positioned to participate in Greek projects with a total value of greater than €500 million.
Reed Smith advised on the transaction, with a team comprising London-based partners Panos Katsambas and Shervin Shameli and Athens-based associate George Fountas.
An Interview with Shervin Shameli, Reed Smith
Please tell us more about the closing and the roll that you played in advising Sirec Energy.
We were engaged by Sirec Energy in 2020 to advise on structuring the team’s inaugural green energy fund, and to work with them on formulating the terms of the fund and drafting the associated fund documentation. The matter required cross-border working between Reed Smith’s London and Athens offices to provide both market knowledge and local legal and technical expertise to the client.
Our combined team initially devised the structure of the fund, with the team opting for a Greek AKES fund (a Greek contractual fund formed in accordance with the exemptions to AIFMD enacted for Greek venture funds with a focus on investment into Greece). We then oversaw both closings of the fund, leading on negotiations with investors at each closing and taking responsibility for drafting the principal fund documents and associated amendments to accommodate agreed investor changes ahead of each closing, with the fund ultimately achieving its target fund size of €70 million by its final closing.
What were the key considerations and obstacles of the operation that you had to take into account?
The initial principal consideration was how the fund should be structured to ensure it appealed to the likely investor base and could be marketed accordingly but also provided for tax efficiency for the team and investors. On the basis that the majority of investors were likely to be Greek-domiciled, alongside a limited number of other European and Middle Eastern investors, and working alongside Sirec’s Greek tax advisers, Deloitte, we concluded that the Greek AKES structure would be the best option for the client.
The next fundamental consideration related to the terms of the fund. For first closing purposes, as the fund was cornerstoned by the Hellenic Development Bank of Investments (HDBI), the Greek Sovereign Fund of Funds, we had to ensure that the fund structure and its terms complied with local HDBI requirements and met investor expectations for market standard terms. This required the incorporation of bespoke fund terms, which needed to be carefully thought out against the day-to-day operation of the fund and clearly explained to the other first closing investors to ensure their support.
The matter required cross-border working between Reed Smith’s London and Athens offices to provide both market knowledge and local legal and technical expertise to the client.
In the subsequent run up to final closing, Sirec Energy entered into extensive negotiations with Mubadala Investment Company (MIC), an Abu Dhabi-based sovereign investor managing a $284 billion global portfolio. As MIC was not familiar with the HDBI requirements, we had to navigate some careful amendments to the fund agreement to ensure it worked for both investors in time for a tight final closing deadline.
What impact do you imagine this final closing will have on Sirec Energy and the sustainability of the wider Greek economy?
The closing will be catalytic to Sirec Energy’s ability to pursue its environmentally sustainable investment strategy of investing in projects that achieve energy saving, energy production from renewable sources and projects of cyclical economy. Having achieved a final closing of its inaugural closed-ended investment fund means that Sirec Energy has a committed pool of capital to work with to pursue its projects pipeline, which it has developed during fundraising. As the fund will aim to participate in projects solely in the Greek market with a total value in excess of €500 million, this will enable the team to have a significant positive impact on environmental sustainability within the local market and economy.
