Greencoat UK Wind leads 25pc investment in London Array wind farm

Greencoat UK Wind announced on Monday that, together with other funds managed by Schroders Greencoat, it agreed to acquire a 25% stake in the London Array offshore wind farm from Orsted.

The FTSE 250 company said the landmark transaction would amount to a total consideration of £717m for the 25% stake, combining investments from itself and other participating funds.

For Greencoat UK Wind itself, the transaction represented a total investment of £444m, comprising an equity investment of £394m, translating to a 13.7% net stake, and a further loan investment of £50m.

It said London Array, commissioned in May 2013, stood as one of the UK's most significant renewable energy projects.

With a total capacity of 630MW, the wind farm boasted 175 Siemens 3.6MW turbines, resembling other prominent wind farms such as Rhyl Flats and Walney.

As of the acquisition, the wind farm was owned by a consortium consisting of RWE at 30%, CDPQ at 25%, Masdar at 20%, and now with the new agreement, Greencoat UK Wind at 25%.

The wind farm's operations are overseen by RWE, and its green credentials had earned it two Renewable Obligation Certificates (ROCs) per megawatt-hour (MWh) generated.

In securing the acquisition, Greencoat UK Wind said it used £640m of new term loan commitments from both existing and new lenders on 29 June.

Additionally, the company prepaid £150m of term loans that were scheduled to mature in November and December, while £200m was drawn under the company's revolving credit facility.

At the end of the second quarter on 30 June, Greencoat UK Wind reported a cash balance of £499m, with no outstanding amount drawn under the revolving credit facility.

The completion of the London Array investment was expected to take place on 31 July.

“We are delighted to invest in London Array,” said chairman Lucinda Riches.

“The transaction was originated and negotiated on a bilateral basis and reflects the company's ability to continue to generate significant shareholder value through selective off-market investments.”

Greencoat UK Wind said it would report its half-year results on 27 July.

Reporting by Josh White for Sharecast.com.