GIP in €1.2bn German offshore wind deal

The investment firm buys 50% stake from DONG Energy – the second time they have teamed up for such a project.

Global Infrastructure Partners has paid DONG Energy close to €1.2 billion for a 50 percent stake in a German offshore wind farm.

The firm’s record-breaking $15.8 billion third fund has invested in the 450MW Borkum Riffgrund 2 offshore wind project, in the German North Sea, buying the share from the site’s Danish developer. The wind farm is currently under construction and is expected to be operational by 2019.

The duo said GIP’s investment includes the purchase price and 50 percent of future engineering, procurement and construction. DONG declined to provide a more detailed breakdown of the figures.

The transaction is the second of its kind sealed by DONG and GIP. In 2015, GIP bought 50 percent of the 330MW Gode Wind I offshore wind project – also based in Germany – in a deal worth €780 million.

“This acquisition underscores GIP’s strategy of investing in superior quality projects and developing long-term strategic partnerships with industry leaders,” said Adebayo Ogunlesi, chairman and managing partner of GIP. Half of the 24 investments GIP made through its first two funds came from industrial joint ventures, Ogunlesi told us earlier this year.

The move for Borkum Riffgrund 2 is the second deal announced by GIP III and the first since the fund was closed in January. The vehicle’s first investment was a €3.8 billion agreement to buy 20 percent of Spain’s Gas Natural Fenosa last September. The 10-year fund is targeting a net IRR of between 12 and 15 percent, according to pension fund documents.