Irish renewable energy firm Amarenco has entered a joint venture agreement with Infracapital, the investment arm of Prudential-owned M&G Investments, to roll out as much as €1bn worth of projects over the next five years.
The deal is the culmination of about nine months of negotiations by company founder, former Bord Gáis boss John Mullins, who has been trying to secure additional backing to roll out renewable energy projects in France, the UK and Ireland.
The new joint venture – Amarenco Infracapital Renewable Investments (AIRI) – expects to develop about 100 megawatts of greenfield energy projects a year over the next five years.
Precise financial details were not disclosed. But it’s understood that based on an average spend of €1.8m to develop each megawatt of renewable energy, the total spent will hit €1bn within five years.
As part of the agreement, Infracapital has invested in an initial portfolio of three operational solar energy projects in France developed by Amarenco. Those sites generate 75MW of electricity and have a 20-year supply deal. Amarenco has a total of five operational solar farms in France, accounting for the bulk of its €250m of assets.
Mr Mullins said that Infracapital has taken a majority stake in the joint venture platform. He added that new energy projects will be bankrolled by both Infracapital and Amarenco, with the completed projects then transferring to AIRI.
“We’re both taking on risk in development,” said Mr Mullins. Subsidiaries of Amarenco will then asset manage the projects. “We end up being an independent power producer,” he added. Infracapital has so far raised and managed over £2.6bn (€3bn) across four European infrastructure funds. Its investments are spread across utilities and utility services including sewage, water and power supply in countries including the UK, Sweden and Slovakia.
Mr Mullins said that cementing the AIRI deal meant Amarenco will probably not have to look for any additional funding for “some time to come”, and that existing funds – when recycled through projects – will be sufficient for it to bankroll project development alongside Infracapital.
“We’ve built up significant internal resources over the past 18 months,” he said. “The capital we have will cycle fairly quickly from a development point of view. The amount of capital we have to apply to these developments is less than previously because we’re now sharing the cost.”
Investors in Amarenco include tech guru Bill McCabe’s Oyster Capital, and Ian Quinn, the founder of medical device firm Creganna, who is also Amarenco’s chairman.
“The co-investment for us means that we are in a position now to concentrate on rolling out the assets,” said Mr Mullins. “We’re looking to acquire developers, starting in France, but we’re very much in the market for talking to Irish developers too.”
He added: “We were never going to have the level of capital that was required for that scale of activity. For us, it’s recognition by Infracapital – one of the major players in Europe – that we’re a team that can deliver them value, but also deliver a very sizeable portfolio.”
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