London-based fund manager Sustainable Development Capital (SDC) is slotting debt financing into place to support its purchase of an additional stake in Primary Energy Recycling Corp, a portfolio of waste-heat to-power and cogeneration projects supplying steel mills in the Midwest.
The identities of additional financial and legal advisers on The Blackstone Group’s sale of a 50% stake in Onyx Renewable Partners and a 175MW portfolio of commercial and industrial solar assets to SDCL Energy Efficiency Income Trust (SEEIT) have been uncovered.
The $150 million deal, struck just before Christmas, was the fruit of an auction process run for Blackstone by BNP Paribas, as previously reported. SEEIT, which is a London-listed vehicle managed by Sustainable Development Capital, was advised by Macquarie Capital as buy-side financial adviser.
The leqal advisers were:
Onyx’s development pipeline is expected to exceed 500 MW over the next five years.
SEEIT plans to fund the purchase with existing cash reserves and debt facilities. Onyx’s roughly $37 million project debt pile will remain in place. Blackstone’s aim with the auction was to find a co-investor with a lower cost of capital to accelerate the deployment of Onyx’s pipeline in the US. SEEIT fit the bill with its roughly 5% dividend yield. Other bidders had included global strategic investors and infrastructure funds focused on renewable energy.
Launched in late June 2020, the process took the form of a traditional two-stage auction. Indicative bids were due in August and final bids in October. Negotiations took place for about a month before the deal was struck. At first, Blackstone was seeking a 50% equity partner for the platform, but agreed to relinquish 100% of the 175MW late-stage C&I portfolio as part of the deal reached with SDC. The late-stage C&I assets are split into four portfolios that are due to be online in the next year and a half, according to a source close to the process. They are made up of 200 individual projects across 18 US states. About 27% of the portfolio’s capacity is operational or near operational. The relationship between Blackstone and SDC will allow the buyer to take advantage of Blackstone’s real estate portfolio and contacts as well as the firm’s relationships with lenders, says the source.
“This is SDCL’s first platform renewables investment in the US,” he notes. “There is a new international player in town.”
Last year will not be looked back on fondly by most people, but for many investors it ended up being a bumper 12 months. After the rebound from the pandemic, where are the remaining investment trust opportunities?
Last year will not be looked back on fondly by most people, but for many investors it ended up being a bumper 12 months. Those of us who had exposure to technology, biotech, gold, and Asia – China, Japan and Korea, in particular – will be patting ourselves on the back. By contrast, value investments struggled in 2020, even after November’s bounce, and many sectors were hit hard by lockdown restrictions. The first question for 2021, is: how quickly will Covid-hit businesses bounce back once vaccination programmes allow the resumption of ‘normal’ economic activity?
The Democrat win is also a shot in the arm for the renewable energy sector in the US. That is potentially good news for US Solar, SDCL Energy Efficiency Income and newcomer Ecofin US Renewables Infrastructure (RNEW). I wouldn’t be surprised if each of these managed to raise more money this year. In the UK too, the government’s pledge to build back greener may help UK-focused renewable funds and GCP Infrastructure which has a sizeable exposure to the renewables sector.
On Christmas Eve, SDCL Energy Efficiency Income (SEIT), a £560m investment trust, agreed to acquire $150m of US solar and energy storage projects as well as a 50% stake in their developer, Onyx Renewable Partners, managed by private equity firm Blackstone. The London-listed energy efficiency fund today announced it had spent $36m acquiring a further interest in Indiana-based assets.
The closed-end fund has grown quickly since raising £100m to launch in December 2018, most recently raising £105m in October. Shareholder total returns, including dividends, were 4% last year, with the shares sinking slightly from August highs. Stockbroker Numis Securities called the latest transaction ‘significant’ and said the 5.8% premium to net asset value (NAV) at which the shares ended 2020 reflected the ‘in-vogue’ nature of energy efficiency and storage.
UK-based investor SDCL’s Energy Efficiency Income Trust (SEEIT) is to acquire hundreds of solar PV and solar-plus storage projects in the US from developer Onyx Renewable Partners and set up a joint venture in a deal worth US$150 million. SEEIT will acquire four portfolios totalling 175MW of capacity in 18 US states from Oxyx and investor Blackstone, and will set up a joint venture with the developer, taking a 50% interest in its project pipeline, which is expected to surpass 500MW by 2025.
The projects comprise more than 200 on-site solar-plus storage projects including rooftop installations, carport and private wire ground-mounted solar PV projects, with individual capacity ranging from 5MW to more than 15MW. Just over a quarter (27%) of the installed capacity is either operational or near-operational, with all projects expected to come online in the next 18 months. Projects that are already online are contracted under Power Purchase Agreements (PPAs) with municipalities, universities, schools, hospitals, military housing providers, utilities and corporates. The acquisition is set to complete over the next few weeks, according to a statement from SDCL.
Jonathan Maxwell, chief executive of SDCL, said the deal will diversity the UK-based group’s portfolio and create a “meaningful impact to reduce the carbon footprint of commercial and industrial clients across the US”.
UK-based investment company SDCL Energy Efficiency Income Trust (SEEIT) has agreed to acquire a series of commercial and industrial (C&I) solar and energy storage projects in the US from funds managed by Blackstone. The US$150 million transaction sees SEEIT purchase four portfolios totalling over 175MW, as well as a 50% stake in the platform that has created them, Onyx Renewable Partners. Blackstone will retain a 50% interest in Onyx.
The four portfolios comprise more than 200 solar PV projects, located in 18 US states. Clients include municipalities, universities, schools, hospitals, military housing providers, utilities and corporations. Around 27% of the purchased portfolio is operational or near operational, with the remainder expected to be completed over the next 12 to 18 months.
SDCL Energy Efficiency Income Trust plc (LON:SEIT), or SEEIT, will buy a series of solar-plus-storage portfolios along with a 50% stake in their developer, Onyx Renewable Partners, from the Blackstone Group Inc (NYSE:BX). More specifically, the investment fund will pay about USD 150 million (EUR 122.9m) and in return will get the aforementioned Onyx ownership stake along with a 100% interest in four commercial and industrial (C&I) portfolios with a combined capacity surpassing 175 MW. The agreed transaction will provide SEEIT with access to Onyx’s follow-on pipeline, which is seen growing to more than 500 MW over the next five years.
The four portfolios in question include more than 200 rooftop, carport and private-wire, ground-mounted solar photovoltaic (PV) projects in 18 states. About 27% of them, by installed capacity, are already operational or close to initiating operation. They are contracted under long-term power purchase agreements (PPAs) with predominantly investment grade C&I counterparties. The remaining assets will be completed over the next year and a half. SEEIT noted it will also have a right of first refusal to buy any future Onyx projects at a pre-agreed rate of return. The agreed transaction is expected to close in the coming weeks. SEEIT will finance it from existing cash reserves and debt facilities.