GCP Infrastructure has disposed of its interests in two operational onshore wind farms, Pates Hill Wind Farm and Milton Keynes Wind Farm, with total generating capacity of 28MW. The projects are located in Cumbria and Milton Keynes, each with installed capacity of 14MW, powered by seven Vestas V80 2.0MW turbines. The projects benefit from renewable obligation (RO) subsidy support and have been operational since 2010. The purchaser is OnPath Energy, a subsidiary of Brookfield Asset Management.

GCP says that the sale proceeds comprise a day one consideration – £16.5m – and a deferred element – £1.3m – that is linked to the projects achieving milestones. There are also c. £1.0m of tax benefits released by the transaction. Without factoring in any deferred amounts, the realised IRR of the company’s investment is 9.7% and, including these deferred amounts and the time taken to receive them, the IRR increases to 10.3%. The disposal proceeds (including deferred amounts) represent c. 88% of the valuation included in the net asset value at 30 September 2024.

Proceeds from the disposal will be used in line with GCP’s capital allocation policy and are expected to contribute to the company’s commitment to return at least £50m to shareholders by way of share buybacks.

Capital Allocation Policy update

GCP says that the disposal represents further progress in the execution on its capital allocation policy, as it decreases its equity exposure to merchant electricity prices and provides cash resources to support the share buyback programme. The board and Gravis Capital Management Limited continue to focus on additional opportunities for refinancings or disposals within the portfolio in order to achieve the capital allocation policy’s targets. GCP continues to prioritise a material reduction in leverage, as well as reducing equity-like exposures and exposures in certain sectors, whilst also facilitating the return of £50m of capital to shareholders.

Comments from Andrew Didham, chair of GCP Infrastructure

“This disposal reinforces the Company’s commitment to its capital allocation policy and illustrates the attractive risk-adjusted returns the Company has been able to achieve for shareholders. The disposal is in line with the stated objectives of the capital allocation policy and the Board remain focused on the continued recycling of capital from the Company’s assets as has been set out in such policy.”