Qatar Holding has signed a memorandum of understanding with Spanish energy and utilities company Iberdrola to form a long-term partnership.

The two parties will work together on power projects at various stages down the electricity value chain with a focus on high-growth and emerging markets.

Qatar Holding will also take a 6.16 per cent stake in Iberdrola through a capital increase. The investment is worth €2.1bn ($3bn).

Iberdrola has a dominant presence in the Spanish utilities sector and is looking branch out into power projects across the world. Through its ex-subsidiary Iberdrola Renovables, it has participated in renewable energy projects in Europe and the US. It intends to re-acquire Iberdrola Renovables.

Iberdrola intends to establish its regional headquarters as well as research and development operations in Qatar.

UK law firm Freshfields advised Qatar Holdings on the transaction.