Deal of the Month September 2018: Coillte sells stake in four wind farms

Deal of the Month | Fri 5 Oct | Author – Business & Finance
Coillte-wind-farm
Photo: Artur Kozioł

State-owned commercial forestry business Coillte has agreed to sell operating wind farm assets to Greencoat Renewables plc for an equity price of €136.1m (an enterprise value of €281 million).

The equity price agreed exceeded Coillte’s target of€125m for the assets. The assets sold comprise Coillte’s 50% stake in each of its joint venture wind farms at Raheenleagh, Cloosh Valley and Castlepook and a 25% stake in Sliabh Bawn.

In total the assets represent a net operating capacity of 105.1MW on an equity basis. The Coillte estate has the potential to unlock as much as 1GW (1,000MW) of renewable energy capacity by 2030, representing in excess of 25% of the future targets needed to power homes and businesses across Ireland.

Business model

When Fergal Leamy undertook to revitalise Coillte’s business, focusing on the three core activities of forestry, land solutions and Medite Smartply, was part of the plan. Speaking of the decision to appoint IBI Corporate Partners and UK-based Capricorn as advisors to explore joint venture and partnership models for the wind farm and renewable energy business, he told Business & Finance, in an interview published in December 2017:

We had an interesting decision to make, because we could have simply done this ourselves. The problem then is that we become a wind energy firm and a utility.”

Coillte will retain ownership of the land on which the wind farms are sited, providing a source of significant long-term income. The business model in place is to pinpoint suitable sites and participate in developing wind farms but not in the operation of the facilities thereafter.

Coillte invested €25m in developing the wind farms, with its partners (ESB, SSE and Bord na Móna), over the past four years. The capital raised from the sale is to be recycled back into the business focused on core forestry activities, co-funding of new wind development opportunities and other strategic opportunities.

A strategic partnership

Commenting on the announcement, Fergal Leamy, Chief Executive, Coillte, said,

Today’s announcement demonstrates the exceptional quality of the renewable energy assets which we have developed over the last four years. We have had a very competitive process attracting the very best of domestic and international interest from leading players in the sector and we are very pleased that the price achieved has exceeded our original target.

 

Business Person of the Month, CEO, Coillte, Fergal Leamy

Fergal Leamy, CEO, Coillte

Greencoat Renewables plc has an excellent track record and expertise in the sector and has established a strong presence in Ireland. This sale clearly demonstrates the value we can create from every hectare of land we own to ultimately deliver enhanced value to our shareholder. The proceeds from the sale will be reinvested in the business to generate more value and to enhance the overall value of the Group. Over the coming months we will announce details of how we plan to develop in excess of 1,000 MW of renewable energy generating capacity over the next 10 years across a pipeline of 25 projects wehave identified on the Coillte estate.”

Bertrand Gautier, Partner at Greencoat Capital, said:

We are delighted with this investment into one of Ireland’s premier infrastructure portfolios. As a strategic scale asset this is another example of our ability to find value across the entire market and allows Coillte to recycle its capital to build out their significant development portfolio. We look forward to deepening our strategicpartnership with Coillte.”

IBI Corporate Finance and Capricorn Real Assets were joint Financial Advisers to Coillte on the transaction. McCann Fitzgerald were Legal Advisers to the company.

Business & Finance Deal of the Month

Business Person the MonthBusiness & Finance, in association with KPMG, recognises the most important M&A activity and financing deals in the business landscape through the ‘Deal of the Month’ award.