Greencoat has over 3GW of generation across the UK, Europe and the US. Image: Greencoat.
Global investment manager Schroders is to acquire a 75% shareholding in renewable energy infrastructure manager Greencoat, for an initial consideration of £358 million.
The deal includes a potential earn out, which will be payable three years after completion and is subject to stretch revenue target, the continued employment of the senior management team in the Greencoat business and is capped at £120 million.
Additionally, there is a series of options in place for Schroders to acquire the remaining 25% shareholding over time. This is exercisable by Schroder or the Greencoat management shareholders, and will be based on a fair market valuation at the time.
The transaction will see the two work to become a global leader in renewables, taking advantage of the intersection of the global transition to net zero – with the US and European renewable energy asset markets forecast to grow by more than $1 trillion to 2030 – and the accelerating institutional client demand for environmentally positive projects, the companies said.
Greencoat will benefit from Schroders’ distribution reach, its sustainability capabilities, management experience and brand, it added. The company will become known as Schroders Greencoat, and will become part of Schroders Capital.
Richard Nourse, who founded Greencoat in 2009, said the company was “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.”
“Combining this team with Schroders’ global distribution network and expertise will enable clients to capitalise on the unequalled opportunity that our sector represents - a trillion dollar investable universe - and the chance to meaningfully support the global transition to net zero.”
Since it was established in 2009, Greencoat has grown to operate nearly 200 power generation assets, with an aggregate net generation capacity of over 3GW across the UK, Europe and the US.
It has seen compound assets under management growth of over 48% per annum over the four years to 31 March, with revenue growth of 36% across the period. The company’s revenue and pre-tax profits were £38.2 million and £20.0 million respectively for the 12 months to 31 March 2021.
Greencoat grew its UK solar portfolio in 2020, with the acquisition of a 99MW portfolio from Allianz in October and a 156MW portfolio from co-owned by BlackRock Real Assets and Lightsource BP in May.
While in February 2020, it launched a new fund, dubbed Greencoat Renewable Income LP, which focuses on infrastructure assets for solar and other renewables.
The proposed acquisition of Greencoat has been categorised as a Class 2 transaction under the UK Listing Rules, and is expected to complete in H1 2022, subject to regulatory approval.
“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 to our strategy, continuing our approach of adding capabilities in the most attractive growth segments we can provide to our clients,” added Peter Harrison, Group chief executive of Schroders.