Brookfield Asset Management will take full control of Spanish solar power developer X-ELIO, in the latest move by the Canadian investor to deepen its exposure to the renewable energy sector.

The Canadian group is buying the remaining 50 per cent stake in the Spanish solar power group from US private equity firm KKR, the companies said.

The deal values X-ELIO’s equity at almost $2bn, according to people familiar with matter. The investment comes as Brookfield is raising a fund that will target businesses benefiting from the shift to renewable energy.

“We see really strong dynamics in Europe,” said Ignacio Paz-Ares, head of European Renewable Power and Transition Investments at Brookfield Renewable.

On top of the region’s decarbonisation targets, “you have energy security targets so I think that’s just compounding and even making governments more and more focused on really pushing the deployment of renewables,” Paz-Ares added.

Brookfield’s decision to bet on the European renewable energy sector comes as the EU confronts the threat from the $369bn of green tax incentives and subsidies on offer in the US under President Joe Biden’s Inflation Reduction Act.

Volkswagen, BMW and Enel are among the leading European companies to review their renewable investment plans in the bloc in light of the IRA.

Brookfield previously raised $15bn in a fund co-led by former Bank of England governor Mark Carney, which has supported renewable power development alongside technologies such as nuclear and waste recycling. The group intends to raise a second fund targeting the transition from fossil fuels and aims to attract $17bn from investors, according to one of the people.

Brookfield is taking full control of Madrid-based X-ELIO via Brookfield Renewable. Brookfield has backed similar companies in the US, acquiring Scout Clean Energy and Standard Solar last year.

X-ELIO was founded in 2005 and specialises in building, financing and operating solar plants, storage and hydrogen projects. As well as Spain, the group is also active in the US, Italy, Australia, Japan and Latin America.

KKR first invested in X-ELIO in 2015, buying 80 per cent of the company in a deal that gave the Spanish group an enterprise value of around $1bn. Brookfield came on board in 2019, buying out a minority investor and a portion of KKR’s holdings to amass a 50 per cent stake.

After exiting its investment in X-ELIO, KKR will retain exposure to renewable energy through several investment, including in French renewable energy producer Albioma and British company ContourGlobal.

The transaction is expected to close in the second half of this year.