Establishment of € 480 million investment fund for onshore wind equity financing

Fred. Olsen Renewables AS (“FORAS”), a wholly owned subsidiary of Bonheur ASA “(Bonheur”) has today, 12 July 2022 entered into agreements providing € 480 million equity financing for three existing windfarms in Norway and Sweden and future onshore windfarms in the UK and Sweden.

FORAS will remain the 51% shareholder in such windfarms, while the other 49% will be acquired by an investment fund. The fund’s size will be € 480 million, with Kommunal Landspensjonskasse (“KLP”), MEAG Munich ERGO AssetManagement GmbH (“MEAG”) acting on behalf of various entities of Munich Re Group including ERGO, and Keppel Infrastructure Trust (“KIT”) / Keppel Corporation Limited (“Keppel”), each committing € 160 million.

Initially, the fund acquires an indirect ownership of 49% in three windfarms with a combined capacity of 258 MW (Lista Vindkraftverk AS, Fäbodliden Vindkraft AB and Högaliden Vindkraft AB) for a cash consideration of € 176 million.

In addition to the three initial windfarms, the fund has an exclusive right and obligation to invest 49% in all onshore windfarm projects in the UK and Sweden that FORAS takes forward to Final Investment Decision (“FID”) until the € 480 million commitment is fully utilized or a period of five years has lapsed.

The parties have agreed a valuation procedure for all new projects at FID, which is based on best practice valuation methods for onshore wind at a predefined cost of capital.

FORAS will continue to assume the development risk, and any development profit related to the sale of the 49% ownership in new wind projects will be realized at FID. FORAS and the fund will after FID, carry the estimated construction cost according to ownership (51%/49%).

At the end of the investment period for each windfarm, defined as the shorter of expiration of the license, the land agreement or 30 years from start of operation, 100% interest in the windfarms reverts to FORAS for a nominal value.

The investment fund will be managed by Hvitsten AS, which is licensed as an infrastructure fund manager owned by Fred. Olsen & Co. This platform may assist in the development of further diversified financing opportunities for the Bonheur group of companies.

Sverre Thornes, CEO of KLP, said, “This investment with Fred Olsen Renewables is a good way for KLP and the other institutional investors to access a strong portfolio of diversified land-based wind power investments. A long-term partnership with a developer and operator such as FOR provides an attractive and predictable return while also helping to reduce CO2 emissions and meet the ambitions in the Paris agreement.”

Holger Kerzel, Global Head of Illiquid Assets and Member of MEAG’s Management Board, said, “We are very pleased to have concluded this agreement and to be working with Keppel, KLP and FORAS. With the electricity generated by the wind farms, we will make a remarkable contribution to our common goal of reducing greenhouse gas emissions. This project further expands our portfolio and meets our ambitious requirements for sustainable and economically successful investments in renewable energy assets.”

Mr. Loh Chin Hua, CEO of Keppel Corporation, said, “Keppel’s investment in this onshore wind portfolio, alongside other sterling investors, reflects our focus on making sustainability our business and contributing to the global efforts to combat climate change. The investment will provide Keppel not only with stable recurring income from the operating assets, but also a strong deal flow pipeline in well-established markets in the Nordics and the UK.  We look forward to further strengthening our partnership with KLP and MEAG, as well as Fred. Olsen to build a sustainable future.”

Mr. Jopy Chiang, CEO of Keppel Infrastructure Fund Management, the Trustee-Manager of KIT, said, “This investment marks KIT’s first investment in the renewable energy sector, and our maiden acquisition in Europe. The Nordic region is one of the most mature renewables markets globally. This momentum of demand for green energy is growing rapidly and is reshaping the energy landscape worldwide. We will continue our focus to seek out quality investment opportunities in this space so that we can deliver sustainable returns for our Unitholders.”

Anette Olsen, CEO of Bonheur ASA and Chair of FORAS, said, “Fred. Olsen related companies have for more than 25 years developed a strong eco-system and a solid track record within the renewable energy sector. We are very pleased to continue to build good partnerships, and here with strong long-term renewable energy investors KLP, MEAG and Keppel. This is another important step to further strengthen our ability to contribute towards the World’s need for renewable energy.”

For further queries, contact Richard Olav Aa, CFO Fred. Olsen & Co, +47 957 44 633, richard.olav.aa@fredolsen.com