Big Australian investment manager makes first foray into Australian wind assets

Australian investment management giant First Sentier has made its first foray into the Australian renewable energy sector, buying the Australian wind portfolio from UK infrastructure investor John Laing Group, which is retreating from its renewable investments in Australia and the US.

First Sentier, previously known as Colonial First State Global Asset Management, has agreed to pay $A285 million for John Laing’s interest in six Australian wind farms, including the three stages of the Hornsdale wind complex in South Australia (but not the Hornsdale big battery).

The other assets comprise the  Cherry Tree and Kiata wind farms in Victoria, and the Granville wind farm in Tasmania.. The wind farms involved have an aggregate capacity of 514MW, with John Laing’s share being 209MW.

Danny Latham, Partner FSI’s Unlisted Infrastructure business, said: “This is an important milestone for First Sentier Investors’ Global Diversified Infrastructure Fund as our first investment into the rapidly growing Australian renewables sector whilst also supporting our sustainability objectives.”

“The de-risked operational portfolio of diverse assets provide the fund with a platform for growth in the sector and support of Australia’s transition to a low carbon economy.”

First Sentier has more than $US150 billion ($A219 billion) in funds under management, but while this is the first time it has invested any of it into Australian renewables, other investment and superannuation funds have adding to their wind and solar portfolios, attracted by the stable and solid rates of returns from assets that usually have long term contracts with customers.

John Laing announced its planned exit from Australian wind and solar investments in March this year, part of a global sell-down of renewables that was partly driven by heavy losses from its investment, and frustration with policy and regulations in Australia that had brought its development pipeline to a halt.

It also owns interests in two big solar farms in NSW, Finley (100 per cent) and Sunraysia (90 per cent), but the sale of these has been put on the back-burner for the moment because of uncertainty created by grid connection delays and congestion issues that have already led to big losses.

John Laing appears to be happy with the sale price for the wind portfolio, saying it represents a “small uplift” to John Laing’s book value for the portfolio as at 30 June 2020, and is equivalent to a money multiple on its investment of 1.5 times.

Completion of the sale of the assets is subject to customary consents, regulatory approvals and notification periods, and these are expected to be satisfied by early 2021.

“Since acquiring interests in these assets during 2015-2018, John Laing has de-risked the portfolio, achieved key project delivery milestones and has been actively involved in putting in place off-take and new financing arrangements,” CEO Ben Loomes said in a statement,

“This sale is in line with our commitment to realise assets to maximise value for shareholders, and marks an important milestone in our strategy to realise fully our Renewable Energy portfolio over the next 2 years.”

Note: This story has been updated to clarify that First Sentier is an investment management company, not a super fund.