Schroders has today (21 December) confirmed that it will acquire a 75% stake in renewable infrastructure manager Greencoat Capital for an initial consideration of £358m.
The deal, which follows a cash settlement for the purchase price from Schroders, includes a potential earn-out, subject to stretch revenue targets and to keeping Greencoat's senior management team in place. This will be payable three years after the deal is completed and is capped at £120m.
The remaining 25% of the Greencoat business will also be made available to either Schroders or Greencoat's management shareholders via a series of options, to be made available over time. They will be designed to ensure "maximum stability and alignment between the four founders and Schroders", according to the firms.
Schroders confirms talks with Greencoat Capital
The deal is expected to be completed in H1 2022, subject to regulatory approval, and will see Greencoat's management team - led by its four founders Laurence Fumagalli, Bertrand Gautier, Stephen Lilley and Richard Nourse - continuing to run the business day to day and preserve its existing investment process.
Peter Harrison (pictured), group chief executive of Schroders, said: "We are pleased to welcome the Greencoat team to Schroders. Greencoat is a market-leading, high growth business, with an outstanding management team, which provides access to a large and fast-growing market in high demand among our clients.
"Its culture is an excellent fit with ours and Greencoat's focus aligns very closely to our strategy, continuing our approach of adding capabilities in the most attractive growth segments we can provide to our clients."
Investment trusts are reaping the rewards from interest in alternative assets and EM
He added that Schroders has "demonstrated our ability to integrate acquisitions successfully" and to "create significant value for our shareholders".
"We are confident that we will be able to leverage the strengths of both firms while preserving Greencoat's differentiated position in the market."
Founded in 2009, investment manager Greencoat Capital specialises in renewable energy infrastructure investing and operates almost 200 power generation assets across the UK, Europe and the UK. Its investment products include the Greencoat Renewables and Greencoat UK Wind trusts, as well as a £2.9bn private market business.
Over the last four years, Greencoat Capital has grown its assets under management by more than 48% per annum to £6.7bn, with revenues growing by 36% over the same time frame. Since March, the firm has generated new raises and commitments of £1.1bn.
Co-founder Nourse said: "We are all delighted to have found a partner in Schroders who sees the potential of our business and believes deeply in our mission to build a global leader in renewables investing.
"We are extremely proud of what the brilliant team at Greencoat has together achieved, creating a market-leading renewables asset management firm in the UK and Ireland, a strong platform in Europe and an important expansion into the US."
He added: "Combining this team with Schroders' global distribution network and expertise will enable clients to capitalise on the unequalled opportunity that our sector represents - a trillion dollar investable universe - and the chance to meaningfully support the global transition to net zero."
