BlackRock in £1bn UK solar chase with Lightsource

The pursuit of a 1GW portfolio is being seeded with over 200MW of assets as part of the recently closed Global Renewable Power II fund.

BlackRock has teamed up with UK solar developer Lightsource Renewable Energy in a bid to buy assets with a total enterprise value of £1 billion ($1.3 billion; €1.2 billion).

The pair will seek to acquire about 1GW of operating solar parks across the UK over the next three years. The venture – coined Kingfisher – will be seeded with an initial 25 sites currently owned by Lightsource with a capacity of 156MW and backed by the UK’s subsidy regime. A further 50MW also secured with subsidies and based in Northern Ireland will be added later this year.

A spokesman for BlackRock confirmed to Infrastructure Investor that the deal had been pursued through BlackRock’s second Global Renewable Power Fund, which closed this month on $1.65 billion, in what would be the fund’s first investment in the UK.

“Global Renewable Power II has acquired a 90 percent stake in a 156MW operating solar portfolio in the UK,” the firm said. “The fund acquired the stake from Lightsource, with the developer retaining 10 percent of the project. A framework agreement was also signed with Lightsource providing for further collaboration going forward.”

Kingfisher is set to target solar farms both under levered and unlevered structures. The seeded sites are levered with debt provided by RBS under an incremental loan facility. The latest investment is the sixth transaction agreed by GRP II following deals sealed in the US, Norway and Japan that have seen interests acquired in 576MW of projects, seeking net returns of between 9 percent and 10 percent.

Once completed, BlackRock and Lightsource’s plants are likely to make it the largest owner of solar farms in the UK. Lightsource, which has developed 1.3GW in the country since 2010 and also has development plans in Ireland and India, said Kingfisher is confirmation of its “differentiation as a professional partner to institutional capital globally”.