Octopus Renewables sells Ljungbyholm Wind Farm for €73.7m, achieves 11.3% IRR

Octopus Renewables Infrastructure Trust plc (ORIT) has announced the successful sale of its Ljungbyholm onshore wind farm in Sweden to DWS Infrastruktur Europa, a core infrastructure fund managed by DWS. The transaction, valued at €73.7 million, is expected to deliver an impressive internal rate of return (IRR) of 11.3% over the lifetime of the investment.

Key Transaction Details

The sale price of €73.7 million represents a premium of £1.4 million over the previous valuation of Ljungbyholm. Of this premium, £0.8 million was incorporated into the Net Asset Value (NAV) as of 30 June 2024, while the remaining £0.6 million will be reflected in the NAV for 30 September 2024, scheduled for release in early November 2024.

Impact on Financials and Debt Reduction

The proceeds from the sale will primarily be used to partially repay ORIT’s short-term debt facility. Following this repayment, short-term debt is anticipated to decrease to approximately £134 million, with total gearing expected to fall from 46% as of 30 June 2024 to 43%. This reduction in debt is a crucial component of ORIT’s ongoing financial strategy.

Investment History and Capital Recycling Programme

ORIT acquired the 48 MW Ljungbyholm wind farm at the pre-construction stage in March 2020, investing around €68 million. The wind farm, managed through its construction phase by Octopus Energy Generation, commenced operations in June 2021. The sale is a part of ORIT’s capital recycling programme, which aims to optimize the portfolio and enhance financial stability. This transaction follows the sale of two Polish onshore wind assets in December 2023 and the divestment of a Spanish solar PV project option in January 2024. To date, the capital recycling programme has generated approximately £159 million in gross proceeds.

Advisory and Strategic Insights

Newsec Energy Transition AB provided advisory services for the transaction. Phil Austin, Chairman of Octopus Renewables Infrastructure Trust plc, expressed satisfaction with the completion of this phase of the capital recycling programme. He highlighted the sale’s premium price and its positive impact on the company’s valuations. Austin also underscored the successful management of the wind farm’s construction and operation by Octopus Energy Generation.