A joint venture of Altius Renewable Royalties and funds managed by affiliates of Apollo Global Management called Great Bay Renewables has closed a royalty investment with Northleaf Capital Partners related to three renewables projects totalling 216MW in Texas.
The $52.5m royalty revenue-based royalty investment includes the 151MW Old Settler and 50MW Cotton Plains wind farms, and the 15MW Phantom solar farm.
Output from Cotton Plains and Phantom Solar is sold at a fixed price under long-term contracts with the US Department of Defense through to January 2045, while the output from Old Settler will be sold into the ERCOT market.
The three projects have been in commercial operation since 2017.
The royalty investment has been structured using royalty rates that vary over time and provide Great Bay Renewables with $4-7m per year over the first 10 years of the investment.
The structure also allows the company to achieve its investment hurdle targets while optimising Northleaf’s project level cash flow profile.
The royalty funding will be used to repay existing debt financing and provide additional working capital.
Northleaf managing director Jared Waldron said: “We are pleased to be partnering with GBR to implement an innovative financing solution that will create value for our investors.
“As long-term assets producing stable cash flows from the generation of clean energy, the Projects will benefit from the long-term financing afforded by this new royalty structure.”
Altius Renewable Royalties and Apollo Funds have agreed to fund the Northleaf investment with approximately 80% of the capital provided by Apollo Funds and the balance of $11.6m to be funded directly by the former.
Apollo Funds have now met their commitment to earn a full 50% ownership interest in Great Bay.