On Friday, Copenhagen Infrastructure Partners (CIP)—the world’s largest fund manager dedicated expressly to greenfield renewable energy infrastructure investments—announced that it has sold a 25 percent stake in itself to Danish wind energy giant Vestas. Proceeds from the transaction will be re-invested into CIP and multiple new funds in the coming years.
Vestas will pay EUR 500 million (about $610 million) for its minority stake in Copenhagen Infrastructure Partners, of which EUR 180 million (about $220 million) will be paid upfront, leaving the remaining EUR 320 million ($390 million) as a potential earn out.
The transaction is a match made in Nordic institutional investment heaven. PensionDanmark, whose EUR 36 billion (about $44 billion) in assets under management make it one of the 50 largest pension funds in Europe, is CIPs’ founding investor. PensionDanmark was also the sole investor in CIP’s first fund back in 2012—at the time, the world’s first dedicated fund for utility-scale greenfield renewable projects—and remains CIP’s largest anchor investor, whose managed client assets today total EUR 14 billion ($17 billion), committed across seven funds.
To date, Copenhagen Infrastructure Partners’ funds have made more than 20 investments in large scale renewable energy infrastructure assets—including offshore wind, onshore wind, solar PV, biomass and energy-from-waste, storage, transmission and distribution, and other energy assets—totaling almost 8 GW in installed capacity across the U.S and Canada, U.K., Germany, Spain, and Taiwan. Another 20-plus greenfield energy infrastructure projects are on track to reach final investment decision and start of construction within the next three years.
CIP has earned investor commitments from close to 100 of the world’s leading pension and insurance companies and large family offices, including blue-chip institutional investors from the Nordics, Continental Europe, the U.K., Israel, Taiwan, Korea, Australia, and organizations such as the European Investment Bank (EIB), the lending arm of the European Union and the world’s largest multilateral lender. Its growth ambitions in decarbonization are immense: CIP is aiming to increase its renewable energy investments to EUR 75-100 billion ($92-122 billion) by 2030.
“The transaction marks a major milestone for CIP and our investors. It strengthens CIP’s position as a market pioneer and global leader within renewable energy investments and complements our industrial know-how with an even stronger capacity to innovate, lead, and enhance the deployment of institutional capital into investments in the global energy transition towards a net zero carbon economy,” CIP Managing Partner Jakob Baruël Poulsen said in a statement.
“As a leader in sustainable energy solutions, Vestas is determined to play a role in driving the global transition toward a decarbonized energy system,” Vestas CEO Henrik Andersen said. “To do so, we must increase our involvement across the renewable value chain and benefit from value creation across technology providers, developers and owners. Our investment in CIP enables us to achieve these goals. I am therefore very excited to begin this new journey with a global leader like CIP.”
Noting the recent years’ rapid growth in renewable energy, due to major technological advancements that have reduced the cost of green energy, CIP expects growth to accelerate in the coming years, as major economies adopt ambitious carbon emission reduction targets.
Vestas has been at the forefront of this phenomenon. The global wind energy giant has to date installed 122 GW of wind turbines in 82 countries, establishing a firm leading position in the global offshore wind market that is expected to reach $120 billion in value by 2030 as a result of the increased global government and policy embrace of renewable energy forms.
“The first 8 years of CIP have been successful and the next decade will likely be even more exciting as growth in renewable power generation accelerates, driven by commitments to ambitious renewable targets in major economies. Offshore wind will grow to become an important part of the energy mix across continents driven by technological progress such as larger turbines and floating foundations. The transaction with Vestas enables CIP to remain in front and invest significantly across the globe,” said CIP Senior Partner Torsten Lodberg Smed, who heads up CIP’s offshore wind activities.
Power-to-X
CIP will roll a portion of the transaction proceeds into a new Energy Transition Fund, to be launched in the first half of 2021. The Energy Transition Fund will invest in technologies such as Power-to-X, which will be critical in decarbonizing large-scale markets in fuel and feedstock.
“In order to reach the critical point of net-zero emissions, the growth within electrification needs to be complemented by decarbonisation of fuels to transportation, feedstock to industrial sectors, and production of green ammonia as fertilizer for agriculture. Vestas and CIP share this strategic perspective alongside a joint ambition to continue to develop CIP into the leading platform for institutional investors seeking to deploy capital directly into some of the largest and leading edge energy projects across the world”, says CIP Senior Partner Christina Grumstrup Sørensen, who leads asset management activities.
”Technologies such as Power-to-X have the potential to significantly decarbonise the economy over the coming decades and provide attractive opportunities for investors with market insight and industrial competence. CIP’s new Energy Transition Fund provides investors with the opportunity to participate directly in the next phase of the energy transition. PensionDanmark was a first mover into renewable infrastructure investments including off-shore wind more than 10 years ago, and we are excited about the opportunity to continue investing with CIP at the forefront of the energy market developments”, says Torben Möger Pedersen, CEO of PensionDanmark and chairman of the Danish Government’s Climate Partnership on Finance.
On the board
As a minority owner, Vestas will be represented on the CIP Holding board and will, together with CIP’s senior partners, focus on the firm’s overall strategic direction.
“I am looking forward to Vestas being part of the board of CIP. Vestas has a strong track record and has, for many years, been a market leader in wind energy solutions. CIP and Vestas have a shared vision for the renewable energy market providing common ground for the strategic direction of CIP, in which CIP will continue to create attractive investment products for institutional investors globally with a significant contribution to the global climate agenda”, says Christian Skakkebæk, Senior Partner in CIP and member of the board of CIP Holding.
According to CIP, daily management and governance of its funds will continue to be carried out by the CIP Partner Group and investment committee of the individual funds. CIP will not be limited in any way regarding the choice of wind turbine and service providers, or negotiating competitive market terms. The CIP team will continue to be responsible for project origination, project and investment structuring in order to generate the best possible risk / return profile for its investors.
Earlier this fall, Copenhagen Infrastructure Partners announced that it was co-investing with Spanish renewable energy firm Forestalia in a portfolio of 27 onshore wind farms totaling more than 1GW of installed capacity, currently under development in Spain. Also this fall, CIP joined with Scotland’s leading renewable energy developer, SSE Renewables, along with Japanese conglomerate Marubeni Corporation to submit joint bids for for the ScotWind seabed lease.
