Ecofin, the specialist utilities and infrastructure investment firm, is making a EUR 122.5m special situations investment in renewable energy company Airtricity.
Ecofin, the specialist utilities and infrastructure investment firm, is making a EUR 122.5m special situations investment in renewable energy company Airtricity.
The investment in Airtricity, a privately-owned international renewable energy company, will be made through three separate funds, including the newly launched Ecofin Special Situations Utility Fund, as well as Ecofin Water & Power Opportunities and Ecofin Global Utilities Hedge Fund.
Commenting on the first investment for the Ecofin Special Situations Utilities Fund Bernard Lambilliotte, CIO and CEO of Ecofin said: ‘This investment is one of the first for our newly launched Ecofin Special Situations Utilities Fund, which focuses on investing in special situations in the utility sector worldwide and will result in more concentrated positions with a higher return objective. Our focus on the utilities sector enables us to find excellent special situation opportunities such as the Airtricity deal and add value by advising on the corporate finance structure based upon our many years of experience as investors in the sector.’
Airtricity is planning to raise EUR 250m as part of its current international expansion, with the other EUR 127.5m committed by its controlling shareholder, NTR, a leading Irish based developer and operator of public and environmental infrastructure focussing on sustainable solutions in renewable energy, bioenergy and recycling led waste management.
A detailed knowledge and understanding of the utilities sector and the company has led Ecofin to make an investment in this privately owned company. Having previously invested in Airtricity junior debt in December 2005, Ecofin has had close relations with the firm for the last six months; meanwhile Ecofin has also had close relations with NTR since October 2004. Airtricity invited Ecofin to bid for the fund raising for its international expansion and, amid strong competition, accepted their offer based on Ecofin’s proven expertise of the sector and the added value Ecofin can bring to Airtricity at this stage of its development.
The recently launched Ecofin Special Situations Utilities Fund focuses on investing in special situations in the utility sector worldwide, such as the Airtricity deal. There is a particular emphasis on Europe, the UK and the US and up to 75% of the fund can be invested in special situations, resulting in more concentrated positions but with a higher return objective. The Fund also takes long and short positions in securities (principally shares) of utilities companies (electricity, water and gas distribution). The objective of the Fund is to deliver absolute returns of around 20-25% per annum.
Airtricity is a world-leading renewable energy company, which focuses on developing and operating wind farm assets in Europe and North America. As an integrated utility company Airtricity is both a generator and supplier of green electricity, and currently supplies renewable electricity to commercial customers in both the Republic of Ireland and Northern Ireland. The investment of €250m will go toward the expansion of their wind generation capacity in Europe and North America. Ecofin believes Airtricity has excellent prospects for growth, based on its credibility and expertise in the market, its clear market vision and its highly qualified and experienced staff. At the same time, many governments are aiming at achieving a greater balance of fuel supply with a UK target for 2020 of 20% of the country’s electricity supply coming from renewable sources.
In addition, renewable investment over the period 2002-2030 is forecast at some USD 1.6trillion and over 30% of the worlds renewable capacity additions are forecast to come from wind.
Two other funds Ecofin manages, Ecofin Water & Power Opportunities and the Ecofin Global Utilities Hedge Fund, will also hold Airtricity in their portfolios following the deal. These funds have seen recent strong performance and growth of funds under management. Since its launch in February 2002, Ecofin Water & Power’s net assets have increased (on an unaudited basis) by 113% to 31 May, 2006, after adjusting for a capital increase completed in June 2005. This growth is after paying dividends totalling GBP 23.9 million to the trust’s Income and Ordinary Shareholders. In the trust’s most recent fiscal year ended 31 March, 2006, the trust’s net assets rose by 57.8% on an unaudited basis following gains of 47.8% in fiscal 2005 and 50.6% in fiscal 2004.
At the end of May 2006 the Ecofin Global Utilities Hedge Fund had seen its net asset value per share rise by 37.34%, on an unaudited basis, since its launch in October 2004. The fund is a long/short equity fund which invests in the equity and equity-related securities of utility companies, principally in the UK, the Euro-zone and the United States. The fund is incorporated in the Cayman Islands and its shares are listed on the Irish Stock Exchange.
Ecofin is an investment and advisory firm, founded in 1992, which specialises in the global utility and infrastructure sectors. The firm is based in London with offices in New York and provides discretionary fund management services and advice to institutional and corporate clients.
Ecofin is an independent firm owned by its principals and private investors. The firm’s principal operating company, Ecofin Limited, is an English company which is authorised and regulated by the UK Financial Services Authority and is registered with the US Securities and Exchange Commission as an investment adviser.
