Solar and wind parks: Swiss investment firm takes control of ailing Baywa subsidiary

Baywa re, the project developer for solar and wind parks, is about to make a fresh start. The Swiss investment company Energy Infrastructure Partners (EIP) is taking over the majority of the company, which belongs to the troubled Munich -based Baywa Group . This had been speculated about for months. The Zurich-based EIP is increasing its share in Baywa re from 49 percent to 65 percent through a capital increase of 150 million euros. The remaining minority shares will remain with Baywa.

Leading lenders would support Baywa re as an independent company through financing. This has been extended until the end of 2028, according to the EIP's press release.

Like its parent company Baywa, Baywa re got into trouble due to excessive growth combined with poor risk management. In mid-2024, a valuation test at Baywa resulted in write-downs of EUR 222.2 million, of which EUR 171.5 million was attributable to Baywa re.

"The change of control is accompanied by a strategic and geographical focus and a streamlining of the business portfolio," says Roland Dörig, managing partner of EIP, in an interview with the NZZ. EIP is also planning a rebranding, including a change of the current name. This will also signal to the outside world the end of the Baywa Group's previously dominant position.

Essentially, Dörig wants to expand Baywa re's so-called IPP business. An Independent Power Producer (IPP) is an independent energy producer that generates electricity and sells it to the public power grid. Such companies are not connected to the traditional public utilities and can therefore operate independently, explains Dörig. They also use various energy sources, including renewable energies such as wind and solar energy.

Over the past decade, Baywa re has grown rapidly and strongly both through acquisitions and organically. The company develops, operates and markets projects and services in the field of renewable energies. As a project financier for solar and wind farms, the company has benefited from the boom in the industry.

Essentially, Baywa re acquired or leased large plots of land from farmers, obtained building permits and environmental reports, and bought components from solar module or turbine manufacturers. Finally, it built and opened solar and wind farms on the land.

According to Dörig, Baywa re will operate financially and strategically independently of the former parent company in the future. The focus will be on the IPP portfolio described. Previous peripheral activities such as services for third parties or the wholesale trade in solar components will no longer be part of the business in the future, says Dörig. He also wants to focus on the regions of Europe and North America. The company previously also had projects in Asia and Australia.

EIP now wants to reorganize the supervisory board. To do this, it is bringing in experts from outside. The company's boss, Matthias Taft, will remain in his position. In recent months, observers have described Taft as a CEO on call. According to a statement, the strategy consultancy Ziems and Partner is supporting Baywa re in its financial restructuring and operational transformation. Hans-Joachim Ziems has been appointed to the board as chief restructuring officer. In addition, Elmar Geissinger, a partner of Ziems and Partner, has been in office as chief financial officer since February 14. Also on the supervisory board are the former FDP Council of States member Ruedi Noser and Sulzer boss Suzanne Thoma.

Baywa has been a well-known name in Bavarian agriculture for decades and is considered Germany's largest agricultural and building materials trader. Among other things, Baywa buys fruit and vegetable products from farmers in the autumn and sells them on. In 2023, the group reported its first loss in history, in the 100th year of its existence.

At the end of the 2000s, the management entered the wind and solar park business through its subsidiary Baywa re and also marketed some of the energy generated. Zurich-based EIP joined four years ago by purchasing a minority stake of 49 percent in Baywa re for 530 million euros.

However, the strong growth had led to a mountain of debts at the parent company amounting to billions. Last year, Baywa received bridging loans and liquidity aid in the three-digit million range. CEO Marcus Pöllinger ultimately had to leave the company.

In mid-November, the financial regulator Bafin also announced that it would subject Baywa's consolidated financial statements for 2023 and the associated management report to an audit. There were concrete indications that the presentation of the financial situation and the risks arising from the Group's financing were incorrect.

At the end of January this year, however, more than 95 percent of financial creditors supported Baywa's new financing concept and spoke out in favor of a long-term restructuring process, which is scheduled to run until the end of 2027.

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