Keppel Corporation and Keppel Infrastructure Trust (KIT) are investing €160 million ($160.47 million) in a portfolio of onshore wind assets in Norway, Sweden and the UK.
They will acquire a 33.33% stake in a joint investment vehicle, alongside Kommunal Landspensjonskasse (KLP) and MEAG Munich Ergo Asset Management, which will co-invest in 49% of the portfolio. Fred. Olsen Renewables AS (Foras), the projects sponsor, will own the remaining 51%.
The transaction will mark Keppel Corporation’s expansion into the wind energy sector and contribute to its Vision 2030 plans to grow the group’s portfolio of renewable energy assets. This will be KIT’s first investment in the renewable energy sector, contributing to its goal of increasing renewable energy exposure to up to 25% of its equity-adjusted assets under management by 2030. Once the deal is done, the Singapore-based Keppel Group will have a total renewable energy portfolio of around 1.8 gigawatts, including assets under development.
Loh Chin Hua, CEO of Keppel Corporation, said, “Keppel’s investment in this onshore wind portfolio, alongside other leading investors, reflects our desire to make sustainability our business and contribute to global efforts to fight against climate change. The investment will provide Keppel not only with stable recurring income from operating assets, but also with a strong deal flow pipeline in well-established markets in the Nordics and the UK. »
According to the European Commission, the EU plans to reduce net greenhouse gas emissions by at least 55% and has proposed to increase its current target for renewable energy sources from 32% by 2030 to at least 40%. Against this backdrop and growing demand for electricity, the outlook for wind and other renewable energy sources should be positive, Keppel said.
The joint investment vehicle, FundCo, will initially co-invest in 49% of the three operating wind farms in Sweden and Norway, with a combined generation capacity of 258 megawatts. FundCo will additionally have an exclusive five-year right and obligation to co-invest in 49% of Foras’ entire eligible pipeline of onshore wind assets (1.3GW) in Sweden and the UK. Uni when they get the final investment decision, up to a total capital commitment of 480 million euros.
KLP is Norway’s largest pension fund, with assets under management of more than 900 billion crowns ($87.68 billion) as of March 31, 2022. MEAG, with assets under management of 330 billion euros, is part of Munich Re. KLP and MEAG will each commit €160 million for a 33.33% stake in FundCo. Foras, based in Oslo, Norway, has been developing wind farms in Norway, Sweden, Ireland and the UK since 1997.
The proposed co-investment in the initial portfolio is expected to be completed by the third quarter of 2022.