The British group Universities Superannuation Scheme (USS), the UK’s largest private pension fund, has entered the renewables business in Spain with a stake in Bruc Energy. The latter is the renewables investment vehicle created by the Canadian pension fund OPTrust and the businessman and former CEO of FCC Juan Béjar. USS has bought the 50% stake of Bruc Energy for a total of €225 M. The remaining 50% of Bruc Energy will remain in the hands of the current partners.
With this transaction, the British firm commits to provide half of the funds needed to build a portfolio of at least 4,000 MW of solar photovoltaic energy. In addition to solar, Bruc Energy’s growth plan includes investments in other renewable technologies such as wind.
Bankinter’s analysts highlight the fact that “corporate operations continue to take place in the renewables sector, as the sector’s growth expectations are very favourable.” As they explain:
“The demand for electricity will double in the period 2020-50 due to the momentum of new technologies (electric car, Big Data…). In addition, all countries are accelerating the reduction of carbon emissions. These factors together with the sharp reduction in the cost of installation and maintenance of renewable technologies (photovoltaic and wind) shape this positive outlook for the sector.”
USS Investment Management CEO Simon Pilcher has said the firm has invested or engaged around €1.162 Bn (£1 Bn) in renewable energy. And this deal, which he says makes good financial sense, closely follows its goal of becoming Net Zero by 2050.
OPTrust CEO Morgan McCormick said USS’s investment will help Bruc become one of the leading renewable energy platforms in Spain, while Juan Béjar said the partnership secures access to funds to develop the existing portfolio.
USS, the UK’s leading pension scheme for universities and other higher education institutions, has more than 400,000 members and assets of around €79 billion (£68 billion). The transaction was advised by Royal Bank of Canada (RBC), Greenhill and Nomura.
As Bankinter notes, “pension funds and private equities are playing a very prominent investment role in the sector. Their long-term investment time horizon is very appropriate for the development of renewable project portfolios.”
We have recently seen a halt or delay in some of the planned IPOs in the sector. The equity investor has a shorter time horizon and is not willing to pay high multiples for project portfolios where visibility on the successful execution or commissioning schedule of the assets is more limited.