Transaction will see pioneering green energy investor renamed Schroders Greencoat within Schroders’ private markets division
UK investment giant Schroders has acquired a 75 per cent stake in Greencoat Capital, one of Europe’s largest renewable infrastructure managers, it announced today.
The asset manager said it had snapped up the stake for an initial consideration of £358m, with the two companies setting out an ambition to become a global leader in renewables investing. As a result of the transaction, the venture is set to be renamed Schroders Greencoat, which will be folded into Schroders’ private markets division, Schroders Capital, it said.
Greencoat Capital, which was founded in 2009, operates nearly 200 power generation assets across the UK, Europe and US, having helped to pioneer investing in large-scale, renewable energy infrastructure in both listed and private formats. Its investor mandates typically comprise permanent or 25-year capital, and as of November 2021 Greencoat Capital boasted £6.7bn of assets under management.
Schroders said unlocking private capital in the clean energy transition was set to become “increasingly important” to governments as net zero goals drew closer, and that it had also been motivated to snap up the stake in Greencoat Capital by strong investor demand for long-duration assets that provide long-term, secure income streams.
“Greencoat is a market-leading, high growth business, with an outstanding management team, which provides access to a large and fast-growing market in high demand among our clients,” said Peter Harrison, global chief executive at Schroders. “Its culture is an excellent fit with ours and Greencoat’s focus aligns very closely to our strategy, continuing our approach of adding capabilities in the most attractive growth segments we can provide to our clients.”
For its part, Greencoat said the deal would boost its growth and enable it to enhance its offering to clients, pointing to Schroders’ significant distribution reach, sustainability capacities and management experience.
“Combining this team with Schroders’ global distribution network and expertise will enable clients to capitalise on the unequalled opportunity that our sector represents – a trillion dollar investable universe – and the chance to meaningfully support the global transition to net zero,” said Greencoat founder Richard Nourse.
The deal, which follows a cash settlement for the purchase price from Schroders, includes a potential earn-out, subject to stretch revenue targets and keeping Greencoat’s senior management team in place. This will be payable three years after the deal is completed and is capped at £120m, according to Schroders.
The remaining 25 per cent of the Greencoat business will be made available over time to either Schroders or the Greencoat management shareholders through a series of options, which will be designed to ensure “maximum stability and alignment between the four founders and Schroders”, the firms explained.
The deal is expected to be completed within the first six months of 2022, subject to regulatory approval.