Niche funds can help developers recycle

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Richard Heap
February 19, 2016
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This content is from our archive. Some formatting or links may be broken.
Niche funds can help developers recycle

You know when you go to see a band and they don’t play your favourite song? It's disappointing. We got that feeling this week when we read EDF’s results and didn’t see our favourite deal.

Okay, that is overstating it. We don’t get quite that excited about annual results! But it did make us think it is worth looking a little closer at a largely unnoticed deal from late 2015.

In October, Lancashire County Pension Fund announced that it had entered an agreement with the French utility’s renewables arm, EDF Energies Nouvelles, to buy a minority stake in a 500MW portfolio of wind farms in Portugal. EDF EN said this partnership would help it to seize growth opportunities in the Portuguese market; and LCPF chief investment officer Mike Jensen said he looked forward to “developing and strengthening this partnership”.

So they are excited, but why are we? Local council pension funds are generally pretty dull; Portugal is an established but slow-growth market that has nearly hit its 2020 targets already; and EDF EN partners with plenty of firms so this relationship is hardly unique.

But therein lies its importance. If the traditionally dull local authority pension funds start to see the potential in wind as a safe and reliable asset class, then we are likely to see more deals of this kind. This can then be a great source of capital for developers and utilities, as it enables them to sell stakes in their operating assets and then invest in new schemes.

That is why EDF EN sees deals like this as key to its growth. The entry of local authorities into the market gives developers and investors more options when they are looking to exit schemes; and shows that even resource-starved, time-poor council investment teams see wind can make sense. This can only help to support the growth of the secondary market.

This is not unprecedented, of course.

Danish pension fund manager PensionDanmark has done some high-profile wind deals in wind; and Ontario Teachers’ Pension Plan and the Public Sector Pension Investment Board of Canada launched a London-based renewable energy investor, Cubico, with Santander last May. But the interesting thing about LCPF is that it shows that much smaller and more conservative funds are willing to give wind a go.

And what is LCPF? Well, in the niche world of UK council pension funds it is something of a trailblazer.

It is a £6bn fund for employees of Lancashire County Council in northwest England, and is run by chief investment officer Mike Jensen. Over the last seven years he has overhauled LCPF’s strategy from a largely passive investor to an active one. Wind is only ever likely to be a small part of its portfolio, but it is good that it is in the mix at all.

The other benefit we see here is for wind’s reputation. If someone is unsure on wind then they are more likely to look kindly on a sector that supports their pension pot.

Buyers like this will not revolutionise the wind market — but they can be supportive of it. The fact these once niche, backwater funds are taking a more active role in their future investment strategies can only see them coming more to the fore.

You know when you go to see a band and they don’t play your favourite song? It's disappointing. We got that feeling this week when we read EDF’s results and didn’t see our favourite deal.

Okay, that is overstating it. We don’t get quite that excited about annual results! But it did make us think it is worth looking a little closer at a largely unnoticed deal from late 2015.

In October, Lancashire County Pension Fund announced that it had entered an agreement with the French utility’s renewables arm, EDF Energies Nouvelles, to buy a minority stake in a 500MW portfolio of wind farms in Portugal. EDF EN said this partnership would help it to seize growth opportunities in the Portuguese market; and LCPF chief investment officer Mike Jensen said he looked forward to “developing and strengthening this partnership”.

So they are excited, but why are we? Local council pension funds are generally pretty dull; Portugal is an established but slow-growth market that has nearly hit its 2020 targets already; and EDF EN partners with plenty of firms so this relationship is hardly unique.

But therein lies its importance. If the traditionally dull local authority pension funds start to see the potential in wind as a safe and reliable asset class, then we are likely to see more deals of this kind. This can then be a great source of capital for developers and utilities, as it enables them to sell stakes in their operating assets and then invest in new schemes.

That is why EDF EN sees deals like this as key to its growth. The entry of local authorities into the market gives developers and investors more options when they are looking to exit schemes; and shows that even resource-starved, time-poor council investment teams see wind can make sense. This can only help to support the growth of the secondary market.

This is not unprecedented, of course.

Danish pension fund manager PensionDanmark has done some high-profile wind deals in wind; and Ontario Teachers’ Pension Plan and the Public Sector Pension Investment Board of Canada launched a London-based renewable energy investor, Cubico, with Santander last May. But the interesting thing about LCPF is that it shows that much smaller and more conservative funds are willing to give wind a go.

And what is LCPF? Well, in the niche world of UK council pension funds it is something of a trailblazer.

It is a £6bn fund for employees of Lancashire County Council in northwest England, and is run by chief investment officer Mike Jensen. Over the last seven years he has overhauled LCPF’s strategy from a largely passive investor to an active one. Wind is only ever likely to be a small part of its portfolio, but it is good that it is in the mix at all.

The other benefit we see here is for wind’s reputation. If someone is unsure on wind then they are more likely to look kindly on a sector that supports their pension pot.

Buyers like this will not revolutionise the wind market — but they can be supportive of it. The fact these once niche, backwater funds are taking a more active role in their future investment strategies can only see them coming more to the fore.

You know when you go to see a band and they don’t play your favourite song? It's disappointing. We got that feeling this week when we read EDF’s results and didn’t see our favourite deal.

Okay, that is overstating it. We don’t get quite that excited about annual results! But it did make us think it is worth looking a little closer at a largely unnoticed deal from late 2015.

In October, Lancashire County Pension Fund announced that it had entered an agreement with the French utility’s renewables arm, EDF Energies Nouvelles, to buy a minority stake in a 500MW portfolio of wind farms in Portugal. EDF EN said this partnership would help it to seize growth opportunities in the Portuguese market; and LCPF chief investment officer Mike Jensen said he looked forward to “developing and strengthening this partnership”.

So they are excited, but why are we? Local council pension funds are generally pretty dull; Portugal is an established but slow-growth market that has nearly hit its 2020 targets already; and EDF EN partners with plenty of firms so this relationship is hardly unique.

But therein lies its importance. If the traditionally dull local authority pension funds start to see the potential in wind as a safe and reliable asset class, then we are likely to see more deals of this kind. This can then be a great source of capital for developers and utilities, as it enables them to sell stakes in their operating assets and then invest in new schemes.

That is why EDF EN sees deals like this as key to its growth. The entry of local authorities into the market gives developers and investors more options when they are looking to exit schemes; and shows that even resource-starved, time-poor council investment teams see wind can make sense. This can only help to support the growth of the secondary market.

This is not unprecedented, of course.

Danish pension fund manager PensionDanmark has done some high-profile wind deals in wind; and Ontario Teachers’ Pension Plan and the Public Sector Pension Investment Board of Canada launched a London-based renewable energy investor, Cubico, with Santander last May. But the interesting thing about LCPF is that it shows that much smaller and more conservative funds are willing to give wind a go.

And what is LCPF? Well, in the niche world of UK council pension funds it is something of a trailblazer.

It is a £6bn fund for employees of Lancashire County Council in northwest England, and is run by chief investment officer Mike Jensen. Over the last seven years he has overhauled LCPF’s strategy from a largely passive investor to an active one. Wind is only ever likely to be a small part of its portfolio, but it is good that it is in the mix at all.

The other benefit we see here is for wind’s reputation. If someone is unsure on wind then they are more likely to look kindly on a sector that supports their pension pot.

Buyers like this will not revolutionise the wind market — but they can be supportive of it. The fact these once niche, backwater funds are taking a more active role in their future investment strategies can only see them coming more to the fore.

You know when you go to see a band and they don’t play your favourite song? It's disappointing. We got that feeling this week when we read EDF’s results and didn’t see our favourite deal.

Okay, that is overstating it. We don’t get quite that excited about annual results! But it did make us think it is worth looking a little closer at a largely unnoticed deal from late 2015.

In October, Lancashire County Pension Fund announced that it had entered an agreement with the French utility’s renewables arm, EDF Energies Nouvelles, to buy a minority stake in a 500MW portfolio of wind farms in Portugal. EDF EN said this partnership would help it to seize growth opportunities in the Portuguese market; and LCPF chief investment officer Mike Jensen said he looked forward to “developing and strengthening this partnership”.

So they are excited, but why are we? Local council pension funds are generally pretty dull; Portugal is an established but slow-growth market that has nearly hit its 2020 targets already; and EDF EN partners with plenty of firms so this relationship is hardly unique.

But therein lies its importance. If the traditionally dull local authority pension funds start to see the potential in wind as a safe and reliable asset class, then we are likely to see more deals of this kind. This can then be a great source of capital for developers and utilities, as it enables them to sell stakes in their operating assets and then invest in new schemes.

That is why EDF EN sees deals like this as key to its growth. The entry of local authorities into the market gives developers and investors more options when they are looking to exit schemes; and shows that even resource-starved, time-poor council investment teams see wind can make sense. This can only help to support the growth of the secondary market.

This is not unprecedented, of course.

Danish pension fund manager PensionDanmark has done some high-profile wind deals in wind; and Ontario Teachers’ Pension Plan and the Public Sector Pension Investment Board of Canada launched a London-based renewable energy investor, Cubico, with Santander last May. But the interesting thing about LCPF is that it shows that much smaller and more conservative funds are willing to give wind a go.

And what is LCPF? Well, in the niche world of UK council pension funds it is something of a trailblazer.

It is a £6bn fund for employees of Lancashire County Council in northwest England, and is run by chief investment officer Mike Jensen. Over the last seven years he has overhauled LCPF’s strategy from a largely passive investor to an active one. Wind is only ever likely to be a small part of its portfolio, but it is good that it is in the mix at all.

The other benefit we see here is for wind’s reputation. If someone is unsure on wind then they are more likely to look kindly on a sector that supports their pension pot.

Buyers like this will not revolutionise the wind market — but they can be supportive of it. The fact these once niche, backwater funds are taking a more active role in their future investment strategies can only see them coming more to the fore.

You know when you go to see a band and they don’t play your favourite song? It's disappointing. We got that feeling this week when we read EDF’s results and didn’t see our favourite deal.

Okay, that is overstating it. We don’t get quite that excited about annual results! But it did make us think it is worth looking a little closer at a largely unnoticed deal from late 2015.

In October, Lancashire County Pension Fund announced that it had entered an agreement with the French utility’s renewables arm, EDF Energies Nouvelles, to buy a minority stake in a 500MW portfolio of wind farms in Portugal. EDF EN said this partnership would help it to seize growth opportunities in the Portuguese market; and LCPF chief investment officer Mike Jensen said he looked forward to “developing and strengthening this partnership”.

So they are excited, but why are we? Local council pension funds are generally pretty dull; Portugal is an established but slow-growth market that has nearly hit its 2020 targets already; and EDF EN partners with plenty of firms so this relationship is hardly unique.

But therein lies its importance. If the traditionally dull local authority pension funds start to see the potential in wind as a safe and reliable asset class, then we are likely to see more deals of this kind. This can then be a great source of capital for developers and utilities, as it enables them to sell stakes in their operating assets and then invest in new schemes.

That is why EDF EN sees deals like this as key to its growth. The entry of local authorities into the market gives developers and investors more options when they are looking to exit schemes; and shows that even resource-starved, time-poor council investment teams see wind can make sense. This can only help to support the growth of the secondary market.

This is not unprecedented, of course.

Danish pension fund manager PensionDanmark has done some high-profile wind deals in wind; and Ontario Teachers’ Pension Plan and the Public Sector Pension Investment Board of Canada launched a London-based renewable energy investor, Cubico, with Santander last May. But the interesting thing about LCPF is that it shows that much smaller and more conservative funds are willing to give wind a go.

And what is LCPF? Well, in the niche world of UK council pension funds it is something of a trailblazer.

It is a £6bn fund for employees of Lancashire County Council in northwest England, and is run by chief investment officer Mike Jensen. Over the last seven years he has overhauled LCPF’s strategy from a largely passive investor to an active one. Wind is only ever likely to be a small part of its portfolio, but it is good that it is in the mix at all.

The other benefit we see here is for wind’s reputation. If someone is unsure on wind then they are more likely to look kindly on a sector that supports their pension pot.

Buyers like this will not revolutionise the wind market — but they can be supportive of it. The fact these once niche, backwater funds are taking a more active role in their future investment strategies can only see them coming more to the fore.

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Full archive access is available to members only

Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.