SL Capital Partners has agreed to acquire 100 per cent of Nordic Power AS from Nordkraft AS, the Narvik based energy group with interests in Northern Norway.
Nordkraft’s core business is the development, construction, production and distribution of natural renewable energy through hydropower and wind power. The Nordic Power portfolio of hydropower assets will be acquired by private markets specialist SL Capital, funded through SL Capital Infrastructure I (SLCI I), its infrastructure fund. The disposal provides Nordkraft with capital to continue its development program.
SLCI I is focused on investing in core infrastructure assets in Europe and this acquisition of 13 high quality, small scale hydro plants generating 58 MW provides an opportunity for the fund to invest in long-term assets alongside a strong Norwegian partner in a region with a stable regulatory environment. The transaction is the second investment completed in the past week by the fund, following the acquisition of Gasum’s local gas network operations in twelve areas of Finland and the Helsinki natural gas network.
Looking forward, SL Capital and Nordic Power will co-operate closely and have agreed a 15-year management contract with the Nordkraft. Under this agreement, the Nordkraft team will manage, operate and maintain the plants, ensuring continuity of supply to the grid for consumers in the region. Nordic Power has committed to continue the maintenance capital expenditure program established by Nordkraft. In addition, Nordic Power has entered into a strategic co-operation agreement that provides the basis for Nordic Power to acquire further hydro power assets that are close to commissioning from Nordkraft. This would provide the utility with visibility on funding for the development of further hydropower assets in northern Norway.
“This is a really important and strategic step for Nordkraft, both reducing the financial risk and securing income through management and operation of the plants. We recognise that this arrangement with a different Operator and Owner is rather new in the hydro sector. However in other sectors such as oil & gas and real estate this type of arrangement has been worked very successfully over long time periods. Nordkraft has now established a strategy with increased focus on Operations and we believe that this long term partnership with SL Capital will become a ‘win-win’ and furthermore will give both companies opportunities for organic growth,” says Eirik Frantzen, CEO of Nordkraft
Graeme Gunn (pictured), Partner of SL Capital, says: "We are delighted to announce this transaction so quickly after the recent purchase of the natural gas distribution network in Finland, demonstrating the positive momentum and deep market knowledge of our team working on the Norwegian hydopower sector. We have made the investment and become the owners of this high quality portfolio of assets through our infrastructure fund. The hydropower sector in Norway is one of the most developed in the world and we have a high level of confidence that our partnership with Nordkraft and the management team at Nordic Power will prove successful."
Dominic Helmsley, Managing Director Infrastructure, adds: "The SL Capital team has pursued investments in this sector of the energy market over the past year and this deal with Nordkraft was attractive given the well invested portfolio of assets and stable return generation. Small hydropower is a growth area of the market across Europe and we will pursue scale through additional purchases in the sector."
