Fred Olsen Renewables (FORAS) has entered into agreements providing €480m equity financing for three existing wind farms in Norway and Sweden.
The agreements will also cover future onshore wind farms in the UK and Sweden.
FORAS will remain the 51% shareholder in such windfarms, while the other 49% will be acquired by an investment fund.
The fund’s size will be €480m, with Kommunal Landspensjonskasse (KLP), MEAG Munich ERGO AssetManagement (MEAG) acting on behalf of various entities of Munich Re Group including ERGO, and Keppel Infrastructure Trust (KIT) / Keppel Corporation Limited (Keppel), each committing €160m.
Initially, the fund will acquire an indirect ownership of 49% in three wind farms with a combined capacity of 258MW (Lista Vindkraftverk AS, Fäbodliden Vindkraft AB and Högaliden Vindkraft AB) for a cash consideration of €176m.
The fund also has an exclusive right and obligation to invest 49% in all onshore wind farm projects in the UK and Sweden that FORAS takes forward to Final Investment Decision (FID) until the €480m commitment is fully utilised or a period of five years has lapsed.
The parties have agreed a valuation procedure for all new projects at FID, which is based on best practice valuation methods for onshore wind at a predefined cost of capital.
FORAS will continue to assume the development risk, and any development profit related to the sale of the 49% ownership in new wind projects will be realized at FID.
FORAS and the fund will after FID, carry the estimated construction cost according to ownership (51%/49%).
At the end of the investment period for each wind farm, defined as the shorter of expiration of the licence, the land agreement or 30 years from start of operation, 100% interest in the wind farms reverts to FORAS for a nominal value.
The investment fund will be managed by Hvitsten AS, which is licensed as an infrastructure fund manager owned by Fred Olsen & Co.
This platform may assist in the development of further diversified financing opportunities for the Bonheur group of companies.
KLP chief executive Sverre Thornes said: “This investment with Fred Olsen Renewables is a good way for KLP and the other institutional investors to access a strong portfolio of diversified land-based wind power investments.
“A long-term partnership with a developer and operator such as FOR provides an attractive and predictable return while also helping to reduce CO2 emissions and meet the ambitions in the Paris agreement.”
Member of MEAG’s management board and global head of illiquid assets Holger Kerzel said: “We are very pleased to have concluded this agreement and to be working with Keppel, KLP and FORAS.
“With the electricity generated by the wind farms, we will make a remarkable contribution to our common goal of reducing greenhouse gas emissions.
“This project further expands our portfolio and meets our ambitious requirements for sustainable and economically successful investments in renewable energy assets.”
FORAS chair Anette Olsen said: “Fred Olsen related companies have for more than 25 years developed a strong eco-system and a solid track record within the renewable energy sector.
“We are very pleased to continue to build good partnerships, and here with strong long-term renewable energy investors KLP, MEAG and Keppel.
“This is another important step to further strengthen our ability to contribute towards the world’s need for renewable energy.”