The asset management arm of insurer Munich Re is investing $300m (€292m) for a stake in Longroad Energy alongside two of the US renewable energy company’s existing investors Morrison & Co and NZ Super Fund.
MEAG is investing the capital for a 12% stake in Longroad alongside Morrison & Co’s listed infrastructure business Infratil and the New Zealand Superannuation Fund, each of whom have agreed to invest an additional $100m into the company, as well as Longroad management.
The latest deal gives Infratil and the NZ Super Fund a 37% stake each in Longroad with the Longroad management team owning a 14% stake.
Longroad, established in 2016, has developed and acquired 3.2GW of renewable generation. It currently holds a project pipeline of 15GW across 13 states and provides operations and asset management services to 3.5GW of projects across the US.
Morrison & Co said the additional capital raised will primarily be used to fund Longroad’s near-term development pipeline, which includes 4.5GW of development projects to begin construction over the next 3 years.
Vimal Vallabh, partner and global head of energy at Morrison & Co, said: “Longroad represents the second of our renewables businesses to reach a level of maturity that has been given strong endorsement by the market, following the sale of the Australasian-focused renewables business Tilt Renewables.
“We continue to increase our exposure to this attractive sector globally through Longroad in the US, Galileo Green Energy in Europe, and our newest platform Gurīn Energy, which is focused on the Asian market.”
Perry Offutt, partner and head of North America at Morrison & Co, said: “The strong performance of Longroad since 2016 is an example of our successful track record in infrastructure investment over the past three decades.
”With its expert management team, high-quality operating assets and a well-positioned development portfolio, we are very optimistic about its future.”
Alexander Poll, MEAG’s senior investment manager responsible for US infrastructure investments, said: “This investment is a significant step to further increase the US renewable portfolio for Munich Re. Given Munich Re’s strong position in the US insurance market, we are interested in further investing in the US.”
Martin Kaufmann, a senior investment manager at MEAG US infrastructure investments, said: “This investment makes an important contribution to Munich Re’s net-zero climate commitment under the Net-Zero Asset Owner Alliance, which Munich Re joined in 2020.
”We are also pleased to have teamed up with professional partners on this investment to build a successful long-term relationship.”
Del Hart, the head of external investments and partnerships at the NZ Super Fund, said, “Longroad has been one of the NZ Super Fund’s most successful investments and, in line with our long-term, partnership approach to infrastructure development, we are pleased to both welcome MEAG as a co-investor and contribute more capital ourselves.
”It has been exciting to see Longroad grow since we first invested in 2016 and we look forward to seeing it continue to deliver both strong financial returns and positive environmental and social outcomes.”
Longroad’s CEO, Paul Gaynor, said, “The additional capital will allow Longroad to maximise its competitive position in what remains one of the most attractive markets in the world for renewable energy investment.
”We expect to benefit from improved purchasing power, providing greater optionality and value-maximization opportunities, reliable cash flows from a growing operating base to support the larger pipeline and downside protection.”
To read the latest edition of the latest IPE Real Assets magazine click here.
