EQUITY RESEARCH: ENCAVIS AG

Encavis AG is a Hamburg-based independent power producer operating one of Europe’s largest portfolios of solar and wind parks under long-term Power Purchase Agreements. While this Master Final Work applies key methodologies of Equity Research, it deliberately refrains from issuing a trading recommendation. Instead, the analysis is geared towards assessing the fairness of the €17.50 per share takeover offer made by Kohlberg Kravis & Roberts & Co, a global investment firm, in November 2024. The report applies a twofold valuation methodology, consisting of a Discounted Cash Flow model and a Comparable Company Analysis using the SARD peer selection method. The Discounted Cash Flow yields an intrinsic base-case value of €16.34 per share, implying a 7.1% premium from the offer price. Encavis’ key value drivers include its regulated cash flows, favorable capital structure, and its strategic Accelerated Growth Strategy 2027, which targets >5 GW of installed capacity. However, the business model is subject to risks related to high interest rates, capital intensity, and regulatory uncertainty. ESG factors and sector trends, such as grid congestion and evolving subsidy regimes, were also considered in the qualitative assessment. Given the modest premium and the financial context in which the offer was launched, the transaction is appraised as Fairly Valued, though opportunistically timed. It allows minority shareholders a reasonable exit amid tighter capital markets, but limits exposure to Encavis’ potential long-term upside under continued independent operation.