Renewable Energy Finance: Fred. Olsen Renewables raised $485 million to finance onshore wind farms

published on 02 August 2022

The Norway-based project developer has closed the financing for three existing wind farms in Norway and Sweden, as well as future initiatives in the UK and Sweden. The package is structured as an investment fund jointly owned by Kommunal Landspensjonskasse (KLP), MEAG Munich ERGO Asset Management, and Keppel, with each committing ~$160 million. The investment fund will be managed by Hvitsten, which is owned by Fred. Olsen & Co, a holding company that oversees the Olsen family's interests in a variety of sectors including logistics, energy and consumer goods. This platform would assist in further diversified financing opportunities for the Fred. Olsen’s parent entity, the Bonheur group of companies. Fred. Olsen will remain the 51% shareholder in the wind farms financed by the package, while the remaining stake will be held by the investment fund. 

A 49% stake in the existing wind farms under the agreement (Lista Vindkraftverk, Fäbodliden Vindkraft and Högaliden Vindkraft), comprising 258 MW of capacity, will be transferred to the investment fund for a cash consideration of $177 million. In addition to the three initial wind farms, the fund has the exclusive right and obligation to invest in all onshore wind farm projects in the UK and Sweden that Fred. Olsen progresses to final investment decision (FID), proportionate to its 49% shareholding. The right will be valid until the $481 million 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. Fred. Olsen will continue to assume the development risk, while the development profit related to the sale of the 49% ownership in new wind projects will be realized at FID. Post sanctioning, Fred. Olsen and the fund will contribute to the estimated construction cost according to ownership share. At the end of the investment period for each wind farm, which is defined as the shorter duration of either the expiration of the license, the land agreement or 30 years from start of operation, 100% interest in the wind farms will revert to Fred. Olsen for a nominal value.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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