London-based M&G Investments has provided Primrose Solar, a private equity-owned firm, with £60 million (€76.5 million; $91.3 million) to finance five solar farms in the UK, according to a statement.
The inflation-linked financing is repayable over 18 and a half years and has been provided by M&G’s clients, seeking to secure long-term cash flows. Novatio Capital Limited trading as The Renewable Financing Company acted as the arranger.
The financing is secured against five solar farms which have a total installed capacity of 80 megawatts (MW), generating enough electricity to power approximately 18,000 average homes. Four of the sites have been operational since March 2014 and are located in Glamorgan, Norfolk and Dorset. The fifth site is at Canworthy Water in Cornwall. It was connected to the grid in December 2014 with a capacity of 41MW and is one of the largest operational solar sites in the UK.
Tim Huband, head of project & infrastructure finance at M&G, said in the statement: “These landmark transactions inject long-term institutional financing into the emerging solar power sector. We have structured the deals to deliver inflation-linked returns, with good security to our pension fund clients.
“Given this is a relatively new sector seeking institutional investment it is essential for deals to be structured to protect client capital and ensure risks are appropriately rewarded,” Huband continued.
Primrose Solar was formed in November 2013 through a partnership between Pioneer Point Partners, a sector-specialist private equity firm investing in energy, environment, water and digital economy infrastructure across Europe, and global investment manager York Capital Management.
Giles Clark, chief executive at Primrose Solar, said: “We are very pleased to have worked with M&G and Novatio Capital Limited to complete the refinancing of five solar farms. Securing long-term financing from a major institutional investor such as M&G is a strong endorsement of the quality of these sites, and of our commercial arrangements.”
Clark added that Primrose has 175MW of solar projects either operating or under construction.