Hermes GPE to buy wind stake from UK utility

The London-based private equity and infrastructure investor will spend £59m to acquire a 50% stake in a Scottish onshore wind farm from Centrica.

Hermes GPE, which manages more than £6 billion (€7.0 billion; $9.2 billion) for pension funds and institutional investors, at the end of last week agreed to pay Centrica £59 million for its 50 percent stake in the Braes of Doune onshore wind farm in Stirlingshire, Scotland.

Following the deal, which is expected to close by the end of this week, Centrica will continue to receive 100 percent of the wind farm’s output under a power purchase agreement. It had acquired the stake for £42 million in 2007.

For Centrica, the deal forms part of a strategy to release capital from operational wind assets in order to enhance its returns. It has remaining equity interests in four operational wind farms and interests in two other potential projects.

Centrica is the largest supplier of gas to domestic consumers in the UK and one of the largest suppliers of electricity, operating under the trading names British Gas and Scottish Gas.

The other 50 percent stake in Braes of Doune, which has a total installed capacity of 72 megawatts, was sold by UK utility SSE to fund manager Greencoat Capital in February this year alongside the sale of other wind farm stakes in a deal totalling £140 million. Greencoat listed on the London Stock Exchange in March, raising £260 million.

In an interview in the June 2013 issue of Infrastructure Investor, Hermes GPE head of infrastructure Peter Ho the firm’s clients broadly wanted a replacement for fixed income “at the conservative end of core”.

In May last year, Hermes GPE acquired a minority stake in UK water company Thames Water on behalf of its client, the BT Pension Scheme.