Hg renewables team invests in biogas

HgCapital’s renewable energy team, which recently closed a dedicated fund, has made its first investment outside the wind energy sector, backing a German biogas project called Aufwind.

The renewable energy division of UK mid-market firm HgCapital has invested more than €50 million ($66 million) in German biogas project Aufwind Schmack.

The deal, first revealed in the February issue of sister publication Private Equity International, is the team’s first investment in biogas, its first investment in Germany, and its first outside the wind energy sector.

Aufwind, which also builds wind farms in Central Europe, is the world’s biggest biogas project developer. The process involves fermenting agricultural and household waste, in addition to purpose-grown energy crops.

Hg’s renewables team, led by ex-Allianz specialist Tom Murley, is run as a separate division within Hg and invests from its own fund, the €300 million Hg Renewable Power Partners Fund, which closed in December. This fund has a different return profile from the main buyout fund and may prove attractive to a different type of investor.

This is the team’s sixth transaction, but its first outside the wind energy sector. Previously other areas of renewable energy have not been sufficiently large in scale to make investment worthwhile.