Exclusive: Macquarie to underwrite £750m biomass plant equity

The Australian firm has started a debt raising process for the 299MWe Teesside project for which it is targeting a Q4 financial close.

Macquarie Capital and Macquarie’s Commodities and Financial Markets group have signed an agreement with MGT Power to help the UK developer finance the construction of the Teesside Renewable Energy Plant, Macquarie Group (Macquarie) said in a statement.

The plant, which is being billed as the largest dedicated biomass project to be built in the UK, is expected to have a capacity of 299 megawatts electrical (MWe) upon completion. It has secured government support through the award of a Contract for Difference (CfD).

About £650 million of investment (€906 million; $998 million) is needed to carry the scheme through, as part of a total funding requirement estimated at £750 million, sources close to the matter told Infrastructure Investor.

While it remains unclear where the eventual debt/equity split will stand, it is understood that Macquarie Capital intends to underwrite the whole of the equity investment in the project at financial close. It will also be funding the remaining development costs if appointed as financial adviser to raise the debt project finance, according to the sources.  

Information was issued to banks earlier this month, with a financial close targeted for the last quarter of this year. With all major permits for the project’s construction and operation now secured, works are expected to start by early 2016.

It is understood that no capital will be coming from Macquarie Infrastructure and Real Assets funds, as the transaction is a Macquarie Group principal investment. Macquarie declined to comment on transaction structuring and funding requirements.