Deals

NextEnergy completes first acquisition

The UK solar fund, which completed its £85.6m IPO last month, is targeting £750m over the next three to five years.

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London-listed NextEnergy has acquired Higher Hatherleigh, an operational solar plant in Somerset, south-west England.

The renewable energy vehicle has paid £7.1 million (€8.7 million; $12.0 million) for the operational farm, which was energised in April 2013 and has a generating capacity of 6.1 megawatts (MW). Five percent of the amount, currently withheld by the fund for 12 months, is payable based on the asset’s performance.

The plant was part of a “core shortlist” identified by NextEnergy prior to its £85.6 million IPO on the London Stock Exchange last month. The total proceeds reached the bottom of the range targeted by the vehicle, which was itself below the original £150 million goal NextEnergy had set for itself upon announcing its intention to float in January.

The listing was the latest of a series of renewable fund IPOs launched over the last 18 months, with clean energy vehicles raising as much as £1 billion last year. The trend continued well into 2014, with John Laing Environmental Assets Group (JLEN) raising £160 million in London last March and The Renewable Infrastructure Group selling £66.2 million through a secondary offering the same month.

NextEnergy’s IPO came at a time when investors’ appetite for listed renewables seemed to ebb, as the sector reached a relative degree of saturation and its early backers wanted to see the results of their investment before committing additional capital.

“Investors like size more than number of funds. They want existing funds to grow because that means more liquidity in the share,” Michael Bonte-Friedheim, chief executive of NextEnergy, told Infrastructure Investor.

Bonte-Friedheim said NextEnergy still managed to beat its peers this year in terms of money raised from third-party investors and would invest the proceeds within a matter of months. The fund boasts a pipeline of UK solar assets with an installed capacity of more than 280MW, representing £300 million of investment.

The vehicle intends to return to the market several times over the next 12 months to fund future acquisitions, Bonte-Friedheim said. It is targeting a total size of £750 million over the next three to five years.