Greencoat Capital LLP (Greencoat), the UK's largest renewable energy investor has recently announced that it has completed the acquisition of Sleaford Renewable Energy Plant in Lincolnshire from Glennmont Partners. The investment was made with funds from RPMI Railpen (Railpen), the investment manager for the £30 billion (≈ EUR 33.3 billion) Railways Pension Scheme, and Greencoat Renewable Income (GRI), a diversified fund, with commitments from UK Corporate and Local Government Pension Schemes.
The transaction represents Railpen’s first investment partnership with Greencoat Capital that has approximately GBP 5 billion (≈ EUR 5.5 billion) under management. Greencoat will operate Sleaford with involvement from investors on strategic matters. The terms of the transaction have not been disclosed.
Straw and woodchip-fired CHP
Sleaford is an operational 39 MWe renewable combined heat and power (CHP) plant, which uses a blend of straw and sustainable woodchip to generate renewable power and heat. The plant benefits from well contracted Government-backed cashflows 2.0 Renewable Obligation Certificates (ROCs) per MWh and has circa 15 years of ROC life remaining.
Located within the ‘Grain Belt’, in Lincolnshire, the plant provides a reliable route to market for straw, an agricultural by-product which can represent an additional income source for local farmers. Heat generation by the plant is provided to the local swimming pool and other community facilities and the plant has recently signed a new community funding agreement with the council.
For Glenmont Partners, the sale of Sleaford REP means the last remaining asset of its EUR 437 million Clean Energy Fund I has been divested.
We are delighted to complete the sale of the Sleaford Renewable Energy Plant to Greencoat. This deal proves Glennmont’s ability to provide stable, predictable returns on investment in clean energy infrastructure. The full divestment from Fund I underlines our successful approach working across different markets and technologies. Our team’s unique blend of expertise in operations and asset management will ensure that we continue to identify and secure further value from assets. Sleaford has been an important asset for us in showcasing ESG standards, with multiple community value schemes. In many ways, we are sorry to see it go, commented Peter Dickson, Partner at Glennmont Partners.
Evercore acted as financial advisor and Eversheds Sutherland acted as the legal advisor to Glennmont for the transaction.
Second biomass power acquisition for Greencoat
Sleaford is the second biomass plant acquired and operated by Greencoat following the acquisition of the Templeborough Biomass Power Plant (TBPP) in November 2019 continuing Greencoat’s advance into the bioenergy sector. This is the fourth investment of Greencoat’s recently launched diversified private markets fund, Greencoat Renewable Income LP.
According to Greencoat, the acquisition reflects the “appetite of UK pension schemes seeking predictable, secure income cash flows for renewable infrastructure assets.”
Sleaford is a high-quality asset that will deliver predictable cashflows and significant inflation protection over the long term, helping our clients meet their liabilities. It also plays an important role in the area, supplying sustainable heat to local community facilities and providing arable farmers with a reliable offtake for their excess straw. We look forward to assuming stewardship of the plant as part of our strategy to build our portfolio of diversified renewable energy investments, said Minal Patel, Partner at Greencoat Capital.
For Railpen the purchase diversifies the Long-Term Income Fund’s holdings in a portfolio focused on asset-backed investments in real estate and infrastructure. To date, the fund’s renewables assets have been concentrated in wind and solar investments, the most recent of which was last year’s acquisitions of Tralorg Wind Farm, in South Ayrshire, and Carraig Gheal Wind Farm, in Argyll and Bute.
The project is an ideal match for the Long-Term Income Fund’s continued focus on investing in a diversified portfolio with sustainable, long-dated, and asset-backed income characteristics, particularly in the current environment. We hope to continue playing an active role in the UK’s transition to a low carbon economy while securing stable cash flows for our members. We are delighted to be partnering with Greencoat Capital in the acquisition of Sleaford. We look forward to working with Greencoat, and to growing this relationship, said Lewis Vanstone, Deputy Portfolio Manager of Railpen’s Long-Term Income Fund.