INPP, Amber reach close on Lincs OFTO

The winning consortium, which includes the London-listed fund and its adviser, was shortlisted for two more UK transmission deals last August.

Transmission Capital Partners (TCP), a consortium comprising International Public Partnerships (INPP), Amber Infrastructure and Transmission Investment, has achieved financial close on the Lincs offshore transmission project (OFTO).

Amber is the investment adviser of INPP, which is listed on the London Stock Exchange, while Transmission Investment is a UK-based firm specialised in the development, acquisition, financing and management of electricity transmission assets. TCP was selected preferred bidder for the Lincs OFTO in May 2012.

The transaction is the fifth closed by TCP as part of the tenders announced by Ofgem, the UK’s power regulator, for the long-term licence and operation of OFTOs in the country. Representing a total investment of £171 million (€219 million, $273 million), it is also INPP’s largest to date.

The project connects the 270-megawatt (MW) Lincs wind farm to the grid via 100 kilometers of subsea cables and related infrastructure, including substations. Its shareholders will be paid via an availability-based, inflation-linked revenue stream over 20 years.

“The scale of the investment makes this a significant transaction for INPP,” said Rupert Dorey, chairman of the company. “We believe the long-term, fully inflation-linked revenue that arises from this asset fits well with INPP’s ongoing investment strategy.”

The firm used its existing cash and debt resources to acquire all of the equity and junior debt of the project, with the senior tranche provided by the European Investment Bank. The investment represents 17 percent of INPP’s portfolio, boosting its exposure to the transmission sector to 33 percent.

The firm this morning also announced its intention to raise up to £70 million through the issue of ordinary shares. The proceeds will be used to reduce INPP's current debt facility, which following the Lincs deal is now drawn at approximately £110 million.

Ofgem has already tendered 13 OFTO projects – over two rounds of bids – 10 of which have now reached financial close. TCP was last August shortlisted for two further OFTO projects off the coast of Yorkshire with a combined investment value of £400 million. Preferred bidders are expected to be announced during 2015.