Greencoat in near-£100m deal double

London-listed fund manager Greencoat UK Wind has agreed to acquire two wind farm assets for a total of just over £96m.

Greencoat UK Wind has entered agreements to acquire Kildrummy Wind Farm from BayWa re, a subsidiary of Germany’s BayWa Group, and Maerdy Wind Farm from UK/French developer Velocita Energy Developments.

The acquisitions include the pre-payment of existing indebtedness and will be funded through Greencoat’s cash resources and its acquisition debt facility provided by banking groups RBC, RBS and Santander.

Kildrummy, for which Greencoat is paying £43.3 million (€54.5 million; $74.1 million), is based in Aberdeenshire, Scotland, and has a capacity of 18.4 megawatts (MW). It is the third wind farm that Greencoat has acquired from BayWa re following the acquisitions of Cotton Farm and Earl’s Hall Farm last year.

Maerdy, which is being bought for £52.9 million (excluding cash balances), is located in the Rhonda Valley in South Wales and has a capacity of 24MW. The asset was constructed by Velocita, a portfolio company of US energy fund manager Riverstone Holdings.

Kildrummy and Maerdy were commissioned in May 2013 and August 2013 respectively. Both are subject to an adjustment mechanism that will assess actual energy production over a two-year period with the acquisition price adjusted accordingly.

The acquisitions bring Greencoat’s total number of wind farms to 12 and its total net generating capacity to 226.4MW. The company aims to provide investors with an annual dividend that increases in line with RPI (Retail Price Index) inflation (6.16 pence for 2014) “while preserving the capital value of its investment portfolio in the long term on a real basis through reinvestment of excess cash flow and the prudent use of portfolio leverage”.

Greencoat UK Wind listed on the London Stock Exchange in March 2013 having raised gross proceeds of £260 million. A secondary placement in December last year raised £83 million, which was £50 million below its initial £135 million aim.