Top 100 Power People: Variety of deals key for PE

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Richard Heap
November 13, 2015
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Top 100 Power People: Variety of deals key for PE

One trend we saw in the Top 100 Power People report published on Tuesday was the number of private equity investors on the table. Twelve of the final 100 worked in roles that we classified as private equity, including nine not on the Top 100 before.

But the number of new private equity names in the Top 100 has taken us a bit by surprise, as it contradicts the accepted wisdom in the sector. Over the last two years, we have seen a host of news articles telling us why private equity firms have been leaving the renewable energy sector. We have been told that they do not like backing start-ups with slim chances of generating returns; and do not like to back projects that do not offer short-term returns.

It was this that prompted Calpers chief investment officer Joseph Dear to say, in February 2014, that clean tech does not have a J-curve but rather “an L-curve for ‘lose’”. In the run-up to that comment we saw the likes of Altius and HgCapital exiting wind.

And yet in this year’s Top 100 we can still see the names of top executives from investors such as Centerbridge Partners, ArcLight Capital Partners and Denham Capital. Hell, even cover star Lord Irvine Laidlaw sees his investment firm Highland Group as private equity. These businesses have respectively bought into a large turbine maker; set up large funds; provided start-up funding for new developers; and invested directly in huge projects.

There are a few reasons why we think this has happened.

One reason for the influx of private equity names in the Top 100 is because there is churn in the sector.

Certainly, some private equity firms have stopped investing in wind, but there is still a need for funding and other players have filled that gap. If indeed there is less cash coming into the sector then those actively investment will, of course, look more important.

Another reason is that the wind industry is maturing and so different investors are getting more comfortable with wind as an asset class. This means that more investors are likely to be creative about the deals they do in order to get the returns they want. This requires a more hands-on approach than some of wind’s early backers would have been used to.

And there is the growth of the wind industry into emerging markets, where start-ups need funding. Investors such as Actis and Denham Capital play key roles in providing it.

But the main reason for the new private equity investors on the table is that they did big deals in the last year against a difficult backdrop for the world economy and wind sector.

For Centerbridge, it was the €1bn deal to buy German turbine maker Senvion. For Global Infrastructures Partners, it was buying a 50% stake in 330MW Gode Wind 1 for €780m. And for KKR, it was paying €400m for a one-third stake in Acciona Energia Internacional to build a 5GW mainly wind portfolio. We do not know if they will make it into the table year after year — some will, some won’t — but for the moment these deals look significant.

Private equity investors in wind may not always make the returns they want. However, when it comes to doing deals that institutional investors will not touch, their creativity and flexibility is crucial.

One trend we saw in the Top 100 Power People report published on Tuesday was the number of private equity investors on the table. Twelve of the final 100 worked in roles that we classified as private equity, including nine not on the Top 100 before.

But the number of new private equity names in the Top 100 has taken us a bit by surprise, as it contradicts the accepted wisdom in the sector. Over the last two years, we have seen a host of news articles telling us why private equity firms have been leaving the renewable energy sector. We have been told that they do not like backing start-ups with slim chances of generating returns; and do not like to back projects that do not offer short-term returns.

It was this that prompted Calpers chief investment officer Joseph Dear to say, in February 2014, that clean tech does not have a J-curve but rather “an L-curve for ‘lose’”. In the run-up to that comment we saw the likes of Altius and HgCapital exiting wind.

And yet in this year’s Top 100 we can still see the names of top executives from investors such as Centerbridge Partners, ArcLight Capital Partners and Denham Capital. Hell, even cover star Lord Irvine Laidlaw sees his investment firm Highland Group as private equity. These businesses have respectively bought into a large turbine maker; set up large funds; provided start-up funding for new developers; and invested directly in huge projects.

There are a few reasons why we think this has happened.

One reason for the influx of private equity names in the Top 100 is because there is churn in the sector.

Certainly, some private equity firms have stopped investing in wind, but there is still a need for funding and other players have filled that gap. If indeed there is less cash coming into the sector then those actively investment will, of course, look more important.

Another reason is that the wind industry is maturing and so different investors are getting more comfortable with wind as an asset class. This means that more investors are likely to be creative about the deals they do in order to get the returns they want. This requires a more hands-on approach than some of wind’s early backers would have been used to.

And there is the growth of the wind industry into emerging markets, where start-ups need funding. Investors such as Actis and Denham Capital play key roles in providing it.

But the main reason for the new private equity investors on the table is that they did big deals in the last year against a difficult backdrop for the world economy and wind sector.

For Centerbridge, it was the €1bn deal to buy German turbine maker Senvion. For Global Infrastructures Partners, it was buying a 50% stake in 330MW Gode Wind 1 for €780m. And for KKR, it was paying €400m for a one-third stake in Acciona Energia Internacional to build a 5GW mainly wind portfolio. We do not know if they will make it into the table year after year — some will, some won’t — but for the moment these deals look significant.

Private equity investors in wind may not always make the returns they want. However, when it comes to doing deals that institutional investors will not touch, their creativity and flexibility is crucial.

One trend we saw in the Top 100 Power People report published on Tuesday was the number of private equity investors on the table. Twelve of the final 100 worked in roles that we classified as private equity, including nine not on the Top 100 before.

But the number of new private equity names in the Top 100 has taken us a bit by surprise, as it contradicts the accepted wisdom in the sector. Over the last two years, we have seen a host of news articles telling us why private equity firms have been leaving the renewable energy sector. We have been told that they do not like backing start-ups with slim chances of generating returns; and do not like to back projects that do not offer short-term returns.

It was this that prompted Calpers chief investment officer Joseph Dear to say, in February 2014, that clean tech does not have a J-curve but rather “an L-curve for ‘lose’”. In the run-up to that comment we saw the likes of Altius and HgCapital exiting wind.

And yet in this year’s Top 100 we can still see the names of top executives from investors such as Centerbridge Partners, ArcLight Capital Partners and Denham Capital. Hell, even cover star Lord Irvine Laidlaw sees his investment firm Highland Group as private equity. These businesses have respectively bought into a large turbine maker; set up large funds; provided start-up funding for new developers; and invested directly in huge projects.

There are a few reasons why we think this has happened.

One reason for the influx of private equity names in the Top 100 is because there is churn in the sector.

Certainly, some private equity firms have stopped investing in wind, but there is still a need for funding and other players have filled that gap. If indeed there is less cash coming into the sector then those actively investment will, of course, look more important.

Another reason is that the wind industry is maturing and so different investors are getting more comfortable with wind as an asset class. This means that more investors are likely to be creative about the deals they do in order to get the returns they want. This requires a more hands-on approach than some of wind’s early backers would have been used to.

And there is the growth of the wind industry into emerging markets, where start-ups need funding. Investors such as Actis and Denham Capital play key roles in providing it.

But the main reason for the new private equity investors on the table is that they did big deals in the last year against a difficult backdrop for the world economy and wind sector.

For Centerbridge, it was the €1bn deal to buy German turbine maker Senvion. For Global Infrastructures Partners, it was buying a 50% stake in 330MW Gode Wind 1 for €780m. And for KKR, it was paying €400m for a one-third stake in Acciona Energia Internacional to build a 5GW mainly wind portfolio. We do not know if they will make it into the table year after year — some will, some won’t — but for the moment these deals look significant.

Private equity investors in wind may not always make the returns they want. However, when it comes to doing deals that institutional investors will not touch, their creativity and flexibility is crucial.

One trend we saw in the Top 100 Power People report published on Tuesday was the number of private equity investors on the table. Twelve of the final 100 worked in roles that we classified as private equity, including nine not on the Top 100 before.

But the number of new private equity names in the Top 100 has taken us a bit by surprise, as it contradicts the accepted wisdom in the sector. Over the last two years, we have seen a host of news articles telling us why private equity firms have been leaving the renewable energy sector. We have been told that they do not like backing start-ups with slim chances of generating returns; and do not like to back projects that do not offer short-term returns.

It was this that prompted Calpers chief investment officer Joseph Dear to say, in February 2014, that clean tech does not have a J-curve but rather “an L-curve for ‘lose’”. In the run-up to that comment we saw the likes of Altius and HgCapital exiting wind.

And yet in this year’s Top 100 we can still see the names of top executives from investors such as Centerbridge Partners, ArcLight Capital Partners and Denham Capital. Hell, even cover star Lord Irvine Laidlaw sees his investment firm Highland Group as private equity. These businesses have respectively bought into a large turbine maker; set up large funds; provided start-up funding for new developers; and invested directly in huge projects.

There are a few reasons why we think this has happened.

One reason for the influx of private equity names in the Top 100 is because there is churn in the sector.

Certainly, some private equity firms have stopped investing in wind, but there is still a need for funding and other players have filled that gap. If indeed there is less cash coming into the sector then those actively investment will, of course, look more important.

Another reason is that the wind industry is maturing and so different investors are getting more comfortable with wind as an asset class. This means that more investors are likely to be creative about the deals they do in order to get the returns they want. This requires a more hands-on approach than some of wind’s early backers would have been used to.

And there is the growth of the wind industry into emerging markets, where start-ups need funding. Investors such as Actis and Denham Capital play key roles in providing it.

But the main reason for the new private equity investors on the table is that they did big deals in the last year against a difficult backdrop for the world economy and wind sector.

For Centerbridge, it was the €1bn deal to buy German turbine maker Senvion. For Global Infrastructures Partners, it was buying a 50% stake in 330MW Gode Wind 1 for €780m. And for KKR, it was paying €400m for a one-third stake in Acciona Energia Internacional to build a 5GW mainly wind portfolio. We do not know if they will make it into the table year after year — some will, some won’t — but for the moment these deals look significant.

Private equity investors in wind may not always make the returns they want. However, when it comes to doing deals that institutional investors will not touch, their creativity and flexibility is crucial.

One trend we saw in the Top 100 Power People report published on Tuesday was the number of private equity investors on the table. Twelve of the final 100 worked in roles that we classified as private equity, including nine not on the Top 100 before.

But the number of new private equity names in the Top 100 has taken us a bit by surprise, as it contradicts the accepted wisdom in the sector. Over the last two years, we have seen a host of news articles telling us why private equity firms have been leaving the renewable energy sector. We have been told that they do not like backing start-ups with slim chances of generating returns; and do not like to back projects that do not offer short-term returns.

It was this that prompted Calpers chief investment officer Joseph Dear to say, in February 2014, that clean tech does not have a J-curve but rather “an L-curve for ‘lose’”. In the run-up to that comment we saw the likes of Altius and HgCapital exiting wind.

And yet in this year’s Top 100 we can still see the names of top executives from investors such as Centerbridge Partners, ArcLight Capital Partners and Denham Capital. Hell, even cover star Lord Irvine Laidlaw sees his investment firm Highland Group as private equity. These businesses have respectively bought into a large turbine maker; set up large funds; provided start-up funding for new developers; and invested directly in huge projects.

There are a few reasons why we think this has happened.

One reason for the influx of private equity names in the Top 100 is because there is churn in the sector.

Certainly, some private equity firms have stopped investing in wind, but there is still a need for funding and other players have filled that gap. If indeed there is less cash coming into the sector then those actively investment will, of course, look more important.

Another reason is that the wind industry is maturing and so different investors are getting more comfortable with wind as an asset class. This means that more investors are likely to be creative about the deals they do in order to get the returns they want. This requires a more hands-on approach than some of wind’s early backers would have been used to.

And there is the growth of the wind industry into emerging markets, where start-ups need funding. Investors such as Actis and Denham Capital play key roles in providing it.

But the main reason for the new private equity investors on the table is that they did big deals in the last year against a difficult backdrop for the world economy and wind sector.

For Centerbridge, it was the €1bn deal to buy German turbine maker Senvion. For Global Infrastructures Partners, it was buying a 50% stake in 330MW Gode Wind 1 for €780m. And for KKR, it was paying €400m for a one-third stake in Acciona Energia Internacional to build a 5GW mainly wind portfolio. We do not know if they will make it into the table year after year — some will, some won’t — but for the moment these deals look significant.

Private equity investors in wind may not always make the returns they want. However, when it comes to doing deals that institutional investors will not touch, their creativity and flexibility is crucial.

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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.