HgCapital and Blue Energy agree £250m UK Wind Farm investment deal
February 1, 2013
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HgCapital, the European sector-focused renewable energy and private equity investor, has sold its 177MW wind portfolio, including the developer RidgeWind, to Blue Energy, the UK-based renewable energy investor and developer.
Blue Energy expects to invest £250 million to acquire RidgeWind and build its development portfolio. Blue Energy based in Alderley Edge, Cheshire, plans further significant UK onshore wind acquisitions in 2013.
RidgeWind, founded in 2003, is one of the UK’s leading independent onshore wind farm developers with a portfolio of 45MW of projects in late stage construction, 132MW with planning permission, and a significant development pipeline.
HgCapital Renewable Power Partners, HgCapital’s first dedicated renewable energy investment fund, acquired 100% of RidgeWind in 2007. During HgCapital’s ownership RidgeWind grew from a development portfolio that included one permitted site of 16MW, to successfully permitting a further 6 sites totalling 177MW. RidgeWind also pioneered new methods of sharing wind farm benefits with local communities, including providing electricity funds for area residents and university scholarships for local students.
In 2004 HgCapital was the first major UK private equity firm to establish a dedicated renewable energy investment team, raising its first fund in 2006 at €303 million. The fund is in its realisation phase and in August 2012 announced the sale of its three UK operating wind farms with a combined capacity of 102MW to Munich Re. In 2011 HgCapital raised its second renewable energy fund at €542 million, which is the largest dedicated renewable energy fund in Europe.
Blue Energy has a strong track record in renewable energy. It built the 5MW Westmill solar farm, one of the UK’s largest; and it recently announced plans to build a 155MW solar PV plant in Ghana. It already has 9.7MW of UK wind farms in development, but RidgeWind marks a step change in its onshore wind development and investment programme. The acquisition was funded by Blue Energy’s shareholders, with support from the company’s relationship bank Santander.
Blue Energy CEO Chris Dean said: “This transaction is an important milestone for the growth of Blue Energy and demonstrates our strong commitment to the UK onshore wind sector. Blue Energy has ambitious growth plans and we aim to progress further transactions of a similar nature in the UK wind sector this year. The acquisition of the RidgeWind portfolio and its experienced development team will accelerate our growth here, at the start of our third year of trading.”
Tom Murley, Head of HgCapital’s Renewable Energy Team said: “For the second time in less than a year, the RidgeWind sale confirms that our focused investment strategy is delivering our investors returns at the high end of our target range. In RidgeWind we saw the core elements of value creation: a strong team with a focus on larger sites with the best wind resources and the ability to create and manage an industrial scale UK wind business. RidgeWind has delivered on that promise and we are confident that under Blue Energy’s ownership the company will continue to deliver.”
Two RidgeWind projects are about to become operational: Hall Farm, a 24.6MW wind farm near Beverley, in Yorkshire, is due to commence generation in the next week and the 20.5MW Wandylaw farm, north of Alnwick, Northumberland, is due to complete and commence generation in March. RidgeWind also has planning permission for four more wind farms: Beinneun, an 85MW project near Invergarry, Inverness-shire; Middlewick, 20.7MW near Southminster, Essex; Nutsgrove, 14.35MW near Peterborough; and Grange, 12.3MW near Scunthorpe, Lincs.
The RidgeWind team will be integrated into Blue Energy. Development of RidgeWind’s existing projects will continue uninterrupted and new projects will be developed under the Blue Energy banner. Collectively the members of RidgeWind’s team have more than 60 years of rural land management experience and more than 60 years of energy development experience.
Blue Energy was advised by; Watson Farley Williams and Pinsent Mason (legal), White & Company and PWC (accounting and tax), Colville Partners (corporate finance) and SKM (technical advisers). HgCapital was advised by; Norton Rose (legal), Deloitte (accounting and tax), Sgurr (technical advisors) and Royal Bank of Canada (transaction advisors).