Aquila Capital has reinforced its commitment to Norway by planning to merge Smakraft and Norsk Gronnkraft (NGK), to create the leading operator in the country's hydropower market and the largest operator of small-scale hydropower plants in Europe.

The merger, which is expected to be effective from January 2017, reflects Aquila Capital's active asset management approach and underlines the company's ambition for the expansion of its renewable energy portfolio in Norway. The two companies are wholly financed by Aquila Capital's investment vehicles, including its dedicated European Hydropower Fund[1] as well as that of the Dutch partner APG, the asset manager of ABP, one of Europe's largest pension funds investing in hydropower assets.

The newly created entity will be known as Smakraft and consist of 90 hydropower plants in operation with an annual production of just under 1 TWh. Simultaneously, a separate company, Smakraft Utbygging, will be formed to solely focus on the construction and rehabilitation of small-scale hydropower plants.

Sigbjorn Rabbe, Head of Operations at Smakraft AS, said: "Aquila Capital is committed to sustainable operations and growth in the Norwegian hydropower market. As well as the obvious natural resources in the country there is a deep pool of local expertise to manage the plants, which we use at every opportunity.

"We are determined to build the trust of local communities, adding value and ensuring the highest standards of safety and respect for the environment while at the same time recognising the landowner's rights."

Oldrik Verloop, Managing Director at Aquila Capital and Board Member at Smakraft, added: "The merger is the next logical step to further consolidating our existing hydropower operations in Norway.

"Also, with the formation of a dedicated hydropower construction firm we aim to build five to ten plants every year and with that contribute to increasing the share of renewables in the European energy mix. We are confident that Smakraft will be one of the leading hydropower players in Europe and these developments underline our interest and engagement in the sector."

Michaela M. Eder von Grafenstein, Head of Investment Management Real Assets at Aquila Capital, commented: "The merger comes at a time when institutional investors' interest in renewable energy is increasing significantly.

"Our scale, expertise and extensive field of contacts mean we are the go-to partner in Norway's hydropower sector. We are looking forward to contributing to the further growth of renewable energy in Norway."

To date Aquila Capital manages over 100 hydropower plants with an installed capacity of approximately 400 MW.