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IPE special report May 2018

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Danish pension funds invest €250m in German wind project

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Danish private equity group Copenhagen Infrastructure Partners (CIP), backed by several Danish pension funds, is investing €250m in German offshore wind project Veja Mate as part of an overall financing deal worth €1.9bn.

The investment is being made via CIP’s fund Copenhagen Infrastructure II, whose investors include Danish pension funds PensionDanmark, Lægernes Pensionskasse, PBU, JØP, DIP and PFA, as well as institutional investors Nordea and Nykredit and other international investors.

Christina Sørensen, senior partner at CIP, said: “We are very satisfied with this investment, which benefits from the strong German regulatory framework, and we look forward to contributing with our competence and experience in cooperation with our partners.”

The wind farm is a fully developed and procured offshore wind project with a grid connection on the BorWin2 platform that Sørensen said would deliver stable returns for many years from 2017.

The Veja Mate project is located in the German part of the North Sea approximately 95 km from the coast. 

It will consist of 67 Siemens turbines of 6MW each.

CIP said it was part of a consortium arranging the total financing for the 402MW project, along with Siemens Project Ventures and Highland Group Holdings, which are providing the equity part of the financing. 

This includes non-­recourse financing of €1.27bn, which the parties said was the largest deal of its kind in Germany so far.

Under non-recourse financing, lending banks are only entitled to repayment from the profits of the project being funded, not from the borrower’s other assets.

This part of the financing was signed with a consortium of eight financial institutions, including the KfW programme for offshore wind, Danish export credit agency Eksport Kredit Funden and six mandated lead arrangers: Commerzbank, Deutsche Bank, KfW IPEX­Bank, Natixis, Santander and SMBC.

The debt amount represents 67% of the investment budget and has a maturity of 12 years after the wind farm has been built, which matches the duration of the elevated tariff the project is entitled to under German law for renewable energy. 

Copenhagen Infrastructure Partners II was launched last October.

In March this year, it invested DKK1.6bn (€214m) in the Brite biomass-fired power plant project in the north of England.

Separately, PensionDanmark announced it is investing around DKK225m to build 96 residential units in Vejle harbour in Jutland.

The sum includes the purchase of land from the municipality of Vejle, as well as the cost of construction. 

The 96 homes will be built in two tower blocks containing a total of 10,700 sqm of space.

The land for the new project is next to the canal-front (Kanalfronten) residential development PensionDanmark built earlier, which was offloaded to property manager Nordic Real Estate Partners (NREP) last summer as part of the labour-market pension fund’s sale of its entire residential portfolio.

Torben Möger Pedersen, chief executive of PensionDanmark, said Vejle was an location where the population was growing fast.

“Because of this, we expect that, as with Kanalfronten, there will be good demand for our homes,” he said.

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