UK energy company Low Carbon has raised as much as $1.45 billion (£1.1 billion) from CVC Capital Partners and other investors as private equity firms are increasingly backing renewables operations.
CVC Capital Partners and Low Carbon’s existing shareholder Massachusetts Mutual Life Insurance Company participated in the funding, which will see CVC Capital Partners become the majority owner of Low Carbon, a company developing and operating solar, wind, and energy storage projects in the UK and Europe.
“As a private markets company, we’re clearly looking for attractive risk returns through cycles,” Caine Bouwmeester, partner and head of renewable energy at CVC DIF, told Bloomberg in an interview published on Monday.
“From our perspective, it’s quite an attractive entry point in the market,” said the head of renewable energy at CVC’s infrastructure arm.
The CVC deal with Low Carbon is the latest in a series of major deals that private equity has struck with renewable project developers in recent months.
In early November, Apollo-managed funds agreed to invest $6.5 billion to buy a 50% stake in the Hornsea 3 offshore wind farm of Ørsted, the world’s largest offshore wind developer. The $6.5 billion investment includes the acquisition price for a 50% interest in the joint venture holding Hornsea 3, the world’s largest offshore wind project, and a commitment to fund 50% of the project’s remaining construction costs.
Hornsea 3 is Ørsted’s third gigawatt-scale project in the North Sea’s Hornsea zone and upon completion it will have a capacity of 2.9 GW – enough power to generate low-cost, renewable electricity for more than 3 million UK households.
Ørsted has embarked on a partnership and divestment program, a cornerstone of its business plan, as it seeks to turn around its offshore wind business that has been hit by regulatory changes, cost inflation, and high interest rates. Ørsted earlier this year turned to its existing shareholders to raise capital to cover immediate financing needs, manage risks from regulatory uncertainty in the U.S., and strengthen its capital structure.
By Tsvetana Paraskova for Oilprice.com
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