A consortium of South Korean infrastructure investors have agreed to acquire a 49.9% stake in a portfolio of US wind generating assets.
Korea Hydro & Nuclear Power Co (KHNP), Alpha Asset Management (Alpha), Sprott Korea Investment (Sprott), Hana Financial Investment (Hana) and Korea Investment & Securities (KIS) announced the signing of the deal with Brookfield Renewable (Brookfield) and Invenergy LLC on September 1.
The stake is valued at around US$1.5 billion. Brookfield will continue to hold a 50.1% equity interest in the portfolio.
CIBC Capital Markets acted as exclusive financial advisor, and Lee & Ko LLC and White & Case acted as legal counsel to the consortium. The transaction is expected to close in the fourth quarter.
The portfolio has an installed capacity of 852MW and is comprised of four operating wind assets: Bishop Hill in Illinois, with an installed capacity of 218MW; California Ridge in Illinois, with an installed capacity of 226MW; Prairie Breeze in Nebraska, with an installed capacity of 201MW; and Rattlesnake in Texas, with an installed capacity of 207MW.
Financial investors buying infrastructure assets are typically looking for projects with solid offtake agreements, generating long-term low-risk cashflows.
In this instance, the portfolio is supported by long-term power purchase agreements or hedges with investment grade counterparties with over 12 years of aggregate average remaining capacity weighted contract life. The portfolio also has long-term service agreements with General Electric International that cover turbine operations and maintenance as well as other balance of plant services.
"This landmark Korean transaction is one of the first major investments made by Korean infrastructure investors since Covid-19 and will be the largest ever renewable energy acquisition completed globally by Korean investors," comments Joonhyuk Choi, CEO of Alpha. "We are pleased to be partners with a world class operator and developer, and look forward to working with Brookfield to continue to grow our overseas renewable energy portfolio."
KHNP is a wholly owned subsidiary of Korea Electricity Power Corporation and is the largest electric power company in Korea, supporting 27% of the country’s power consumption. KHNP’s portfolio consists of 24 nuclear power plants, 35 hydroelectric power plants, 16 pumped storage power plants and various other renewable energy assets comprising a total 27.9GW of installed generating capacity.
Alpha is one of Korea’s leading asset managers with nearly 19 years of investment and asset management experience. In October 2019, Alpha launched a dedicated infrastructure investment division, including renewable energy.
Sprott, a subsidiary of Sprott Inc, has extensive experience investing in global energy projects, particularly renewable projects in North America. Sprott was founded in 2012 and has invested in over 1GW in renewable energy in the United States, Chile, Sweden and Mexico with Korean strategic and financial investors.
Hana is a subsidiary of Hana Financial Group, Korea’s fourth largest banking group by assets. Hana Financial Group provides a wide-range of financial services including asset management, brokerage, underwriting, mutual funds and online trading.
KIS is a subsidiary of Korea Investment Holdings Co, and was founded in 1974 as the first investment trust company in Korea. KIS is a leader in Korea’s financial services industry with a comprehensive range of asset management and investment banking services including securities brokerage for domestic and international investors, underwriting, asset management and financial advisory services.
Brookfield operates one of the world’s largest publicly traded renewable power platforms. Its portfolio consists of approximately 19,300MW of capacity and 5,301 generating facilities in North America, South America, Europe and Asia.
The partnership is managed by global alternative investment firm Brookfield Asset Management, which is aligned with its goals via an equity stake.