Greencoat Plans U.K.’s Biggest Wind-Energy IPO to Buy SSE Sites

February 6, 2013 by  
Filed under Green Energy News

Greencoat U.K. Wind Plc plans to
raise 205 million pounds ($321 million) in the British wind
industry’s biggest initial public offering, a sign confidence is
returning following political rifts over its future.

Greencoat will use the proceeds to purchase wind-power
assets from utilities RWE AG and SSE Plc, the infrastructure
fund said today in a statement. SSE has agreed to invest 43
million pounds and the government 50 million pounds in Greencoat
shares, due to list on the London Stock Exchange in March.

The news is a boon for the wind industry, the focus of U.K.
plans to get 30 percent of its power from renewable sources by
the end of the decade, up from almost 12 percent now. Land-based
turbines have faced objections from local communities and
lawmakers in Prime Minister David Cameron’s Conservative Party,
who say they’re inefficient and too heavily subsidized.

“An IPO by Greencoat could boost investor confidence in
U.K. wind after a period of uncertainty over government
support,” said Angus McCrone, a senior analyst at Bloomberg New
Energy Finance. “But as an infrastructure fund, Greencoat would
be a different –- and lower-risk –- type of animal than previous
U.K stock-market debutants in the wind sector.”

Clipper Windpower Ltd., a turbine manufacturer, listed on
London’s Alternative Investment Market in 2005, raising 75
million pounds. Developer Renewable Energy Generation Ltd.
raised 25 million pounds in an IPO the same year.

Subsidy Benefit

Greencoat, established in late 2012, is seeking to benefit
from a U.K. program that pays subsidies to clean-power
generators for 20 years. Today’s agreement with SSE and RWE also
releases funds for the utilities to build new renewable-energy
projects, they said in separate statements.

“The wind farms produce a steady, transparent income
stream from day one,” said Stephen Lilley, a partner at
Greencoat Capital LLP, which manages the London-based fund.
Greencoat expects to pay an initial 6 percent dividend on each
100-pence share, which will increase in line with the Retail
Price Index, he said today by phone. The company can increase
its issue size by 55 million pounds.

SSE, based in Perth, Scotland, agreed to sell four wind
farms totaling 79.5 megawatts for 140 million pounds, with as
much as 43 million pounds of that to be invested in Greencoat.
RWE Innogy, the German utility’s renewables unit, agreed to sell
49.9 percent in its Rhyl Flats offshore park to Greencoat and
the U.K.’s Green Investment Bank. It will also sell as much as
41 percent in its Little Cheyne Court venture.

The stock sale means Greencoat won’t use project-finance
debt for its first purchases, in a market where fewer banks are
willing to lend on longer terms, said Lorna Shearin, a managing
director at RBC Capital Markets, which is joint bookrunner on
the sale with Barclays Plc.

“Greencoat are putting in place an acquisition facility so
they can buy new assets in the future,” she said by phone.
“Ultimately, as they grow, they may put in some long-term debt,
but it would be much less gearing than you see with project
financing.”

To contact the reporter on this story:
Sally Bakewell in London at
sbakewell1@bloomberg.net

To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net

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