Canadian investors Public Sector Pension Investment Board (PSP Investments) and Investment Management Corporation of Ontario (IMCO) signed an agreement to acquire NeXtWind Capital, a German renewable energy company, from a syndicate led by Crestline Investors in Fort Worth, Texas.
The $750 million deal was done alongside London-based Sandbrook Capital, a firm dedicated to building businesses transforming the world’s energy infrastructure. The equity stake will support NeXtWind’s acquisition of operating wind assets and to fund future growth.
Germany is the largest onshore wind market in Europe with 58GW of installed capacity at the end of 2022. Approximately 30% of this capacity (13,000 turbines) has been in service for more than 15 years, presenting a large addressable market of older turbines that will need to be repowered, officials said in the deal announcement.
“Onshore wind repowering represents an important lever in enabling Germany’s energy transition,” said Patrick Samson, senior vice president and global head of real assets investments at C$244 billion ($182 billion) PSP Investments. “We are proud to join forces with NeXtWind’s highly experienced team to deliver on their repowering strategy and to reinforce our commitment to using capital and influence to support the transition to global net-zero emissions by 2050.”
PSP has a C$29.4 billion infrastructure portfolio, which logged 19% in gains for the one year ending March 31, 2023. In April 2022, the Ottawa-based pension system made headlines in launching it climate strategy roadmap to address climate change risk and opportunities in the investment portfolio.
“We are delighted to partner with NeXtWind and co-investors to support NeXtWind’s mission to rejuvenate Germany’s renewable energy asset base. This is IMCO’s first investment in the German wind energy sector, and demonstrates our commitment to boost renewable energy production and enable the global energy transition, in alignment with IMCO’s Climate Action Plan,” said Matthew Mendes, managing director, head of Infrastructure at the C$73 billion IMCO.
IMCO currently has C$8.6 billion in its dedicated infrastructure portfolio, which returned 7.4% in 2022. The public-sector fund enacted its climate action plan last year. In June, IMCO announced plans to invest $400 million in Swedish battery maker Northvolt AB, a leading integrated battery platform focused on the R&D, manufacturing, and recycling of sustainable battery cells and systems.
As for Sandbrook, the private investment firm is dedicated exclusively to partnering with world class management teams to build companies that are crucial to transforming the world’s energy infrastructure. The firm was founded by five partners with decades-long experience in the renewable energy sector and has offices in Stamford, Conn. and London.
Commenting on the NeXtWind transaction, Ken Ryan, Sandbrook co-founder and partner, said “We are thrilled to partner with the NeXtWind management team as well as PSP Investments and IMCO to grow this platform in Germany. We have been looking to enter this space for several years and are confident we have the right team and capital base to become a leading player in the German renewables market.”