- £200m+ surge in investment in six weeks
- String of funding deals to lead to new developments around UK over next 12 months
Energy specialists at the law firm, which has acted on a string of renewables deals in the past six weeks, say a surge activity is evidence of increasing confidence among the banking community towards green power.
In the past month alone lawyers at Pinsent Masons advised on a £94m funding package for a major new wind farm at Carraig Gheal in Argyll & Bute, a £27m financing deal which will see a new development at Bankend Rig near Strathaven and multimillion pound funding packages which will see investment in sites at Spicer Hill near Barnsley, elsewhere in Yorkshire and in South Wales.
Pinsent Masons says it has also seen an increasing level of interest in the acquisition of major stakes in consented UK wind farms. In December the firm closed a deal which saw Scottish Power Renewables acquire Middleton Windfarm near Glasgow from RWE NPower.
Euan McVicar, a Partner in the Energy and Natural Resources team, says that a number of factors have come together to create a 'perfect storm' of investment.
"There has been a steady flow of transactions in the sector over the past year but we definitely saw a huge burst of activity at the end of December carrying over into this month. Several players stepped up efforts to get deals over the line and we are seeing sustained investor appetite. In some cases people are investing in brand new infrastructure which has yet to be built, while in others investors are looking to acquire relatively mature assets which are already plugged into the grid and generating good revenues."
McVicar also say that increased regulatory certainty has also helped, particularly in relation to the Renewable Obligation Certificate (ROC) regime following the publication of a long-awaited consultation on ROC re-banding.
"We're hopeful that investment appetite will remain strong for some time to come. There is greater certainty around the ROC regime which is allowing people to make informed decisions about extending new renewable energy infrastructure or undertaking entirely new projects. The funding is there, as is the government commitment, so its all systems go."
Pinsent Masons says that several financiers have stepped forward to provide funding in recent months. Royal Bank of Scotland, Lloyds Banking Group, The Co-operative Bank are among the funders involved in recent transactions to have reached financial close, while Barclays Infrastructure and several private equity houses are also closing a growing number of deals.
Further, a number of high profile individuals are also adding onshore wind infrastructure to their portfolios. Kennedy Renewables – backed by entrepreneur Brian Kennedy – recently completed on a deal for the development and financing of a 24.5MW wind farm near Cowdenbeath in Fife.
Lawyers at Pinsent Masons also advised FIM Services Ltd, which assists high-net worth individuals and institutions on asset backed investments, on a wind farm development in Myndd Portref in South Wales.
"The quasi-gilt style returns available for clean power are attractive to wealthy individuals. Just like the equity houses, at a time when it is hard to get a good return on the stock market, entrepreneurs are building energy investments into their portfolio. The need for energy is not going to go away."