CVC leads £1.1 billion deal to back UK energy firm Low Carbon

[LONDON] British green-power developer Low Carbon has raised £1.1 billion (S$1.9 billion) in a deal that will result in CVC Capital Partners becoming the company’s majority owner. 

The investment, through CVC’s infrastructure arm (CVC DIF), will help Low Carbon to expand its renewable electricity business in the United Kingdom and Europe, as the region tries to cut its dependence on natural gas by relying more on cleaner alternatives.

CVC’s investment in Low Carbon will be done via its DIF Infrastructure VIII fund.

Massachusetts Mutual Life Insurance Company (Mass Mutual), an existing shareholder in Low Carbon, has also contributed funds, it said in a statement on Monday (Dec 1). The amount invested was not disclosed.

“As a private markets company, we’re clearly looking for attractive risk returns through cycles,” Caine Bouwmeester, partner and head of renewable energy at CVC DIF, said. “From our perspective, it’s quite an attractive entry point in the market.”

It is the latest in a string of major private market allocations to renewable power deals this year.

In November, Apollo Global Management agreed to invest US$6.5 billion in a huge Orsted offshore wind farm in the UK.

Brookfield Asset Management has done a series of big green power deals, and Copenhagen Infrastructure Partners closed its largest renewables fund with 12 billion euros (S$18 billion) back in March. 

The dealmaking is playing out against a backdrop of near-insatiable demand for energy to help power artificial intelligence data centres, as well as a general rise in electrification.

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That has fed a spike in the valuations of publicly traded clean-energy companies, with the S&P Global Clean Energy Transition Index up 45 per cent this year, against a 16 per cent increase in the S&P 500 Index.

The funding from CVC and Mass Mutual will enable Low Carbon to accelerate its development of solar parks, as well as onshore wind farms and battery storage in the coming years, particularly in the core markets such as the UK, Germany and Poland.

Low Carbon has a project pipeline of some 16 gigawatts (GW), as well as 1 GW of assets that are operational or under construction. BLOOMBERG