Schroders to acquire a majority stake in Greencoat Capital

Established in 2009, Greencoat is a specialist investment manager focussing on renewable energy infrastructure investing, including wind, solar, bioenergy, and heat. With GBP6.7 billion (≈ EUR 7.89 billion) of assets under management (AUM) per November 30, 2021, Greencoat operates nearly 200 power generation assets across the UK, Europe, and the US, with an aggregate net installed power generation capacity of over 3 GW.

Greencoat’s investor mandates typically comprise permanent or 25-year capital, reflecting the longevity of the assets in which it invests.

Strategically aligned investment

According to Schroders, the business has an excellent reputation and has demonstrated a consistent ability to deliver growth, and the transaction is aligned with Schroders’ strategy to build a comprehensive private assets platform and enhance its “leadership position in sustainability.”

With the US and European market for renewable energy assets is forecast to grow by more than US$1 trillion by 2030, Schroders says that it is ideally placed to take advantage of this global opportunity with its focus on investment and asset management into all renewable energy types.

We are pleased to welcome the Greencoat team to Schroders. Greencoat is a market-leading, high-growth business, with an outstanding management team, which provides access to a large and fast-growing market in high demand among our clients. Its culture is an excellent fit with ours and Greencoat’s focus aligns very closely with our strategy, continuing our approach of adding capabilities in the most attractive growth segments we can provide to our clients. We have demonstrated our ability to integrate acquisitions successfully, generate growth and create significant value for our shareholders. We are confident that we will be able to leverage the strengths of both firms while preserving Greencoat’s differentiated position in the market, said Peter Harrison, Group Chief Executive of Schroders.

Schroders has agreed to acquire a 75 percent shareholding in Greencoat for an enterprise value of GBP358 million (≈ EUR 421.5 million). The deal includes a potential earn-out, payable three years after completion, which is subject to stretch revenue targets, the continued employment of the senior management team in the Greencoat business, and is capped at GBP120 million (≈ EUR 141.29 million). The purchase price will be settled in cash.

A series of options, exercisable by Schroders or the Greencoat management shareholders, are in place for Schroders to acquire the remaining 25 percent shareholding over time at a price based on a fair market valuation at the time of the option exercise.

The structure of the option arrangements is designed to ensure maximum stability and alignment between the four founders – Laurence Fumagalli, Bertrand Gautier, Stephen Lilley, and Richard Nourse – and Schroders. This management team will continue to run the day-to-day business, “preserving the independence of the investment process and the distinctive culture which is a strong fit with Schroders’ own.”

We are all delighted to have found a partner in Schroders who sees the potential of our business and believes deeply in our mission to build a global leader in renewables investing. We are extremely proud of what the brilliant team at Greencoat has together achieved, creating a market-leading renewables asset management firm in the UK and Ireland, a strong platform in Europe, and an important expansion into the US. Combining this team with Schroders’ global distribution network and expertise will enable clients to capitalize on the unequaled opportunity that our sector represents – a trillion-dollar investable universe – and the chance to meaningfully support the global transition to net zero, said Richard Nourse.

The proposed acquisition of Greencoat is a Class 2 transaction pursuant to the UK Listing Rules and is anticipated to complete in H1 2022 subject to regulatory approval.