Financial close for 396 MW German offshore wind farm development

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Financial close for 396 MW German offshore wind farm development

Merkur Offshore GmbH has announced that the 396 MW Merkur offshore wind development project has achieved financial close.

Merkur is a construction-ready wind farm located approximately 45 km north of the islands of Borkum, Germany, in the North Sea. It will consist of 66 turbines and once complete will generate approximately 1,750 GWh annually, enough clean energy to power around 500,000 homes. A total capital investment of €1.6 billion (US$1.8 billion) was raised from equity investors and bank lenders on a non-recourse project financing basis.

Close to €500 million (US$558.6 million) in equity was provided by a consortium of five sponsors comprising of Partners Group, the global private markets investment manager (with a 50% equity share on behalf of its clients); InfraRed Capital Partners, the infrastructure and real estate investment manager (with a 25% equity share on behalf of its infrastructure investors); DEME Concessions Wind, the infrastructure investment arm of the DEME Group (12.5%); GE Energy Financial Services, the energy investing arm of the industrial company (6.25%); and, L’Agence de l’environnement et de la maîtrise de l’énergie (ADEME), acting in the name and on behalf of the French State (6.25%).

The Merkur Offshore wind farm will be one of Germany's largest wind farms. GE will supply 66 Haliade 150-6 megawatt offshore turbines, installed by DEME, and built and operated by Merkur Offshore. Project construction will start immediately and will be undertaken by GeoSea, member of the DEME Group.

With strong project fundamentals, including contracting and secured grid connection, the debt was arranged in an unprecedented record time of four months. A group of ten international and local banks committed approximately €1.2 billion of senior secured debt to the project. The lenders’ group comprises of KfW Mittelstandsbank, under the umbrella of its German Offshore Wind Programme, as well as nine commercial lenders including: ABN Amro, Commerzbank (Modelling and Tax Bank), Deutsche Bank (Account Bank, Facility & Security Agent, Joint Hedge Coordinator as well as Sole Book Runner); KfW IPEX (Technical Bank and Markets Bank); Natixis; Rabobank (Insurance Bank); SEB (KFW Applicant Bank); SMBC and Société Générale (Documentation Bank and Joint Hedge Coordinator).

Project Merkur was advised by Amsterdam Capital Partners (financial and equity advisor), Deutsche Bank (debt advisor), Hogan Lovells (legal advisor), EY (tax advisor), Marsh (insurance advisor) and PMC (hedging).

The lenders were advised by Clifford Chance (legal), Sgurr (technical), JLT (insurance), Poÿrÿ Management Consulting (market) and Operis (model). Finally, CMS, Norton Rose Fulbright and Allen & Overy were legal advisors to the equity sponsors.

Brandon Prater, Partner and Co-Head Private Infrastructure, Partners Group, stated:

"With several coal-fired and nuclear power plants due to be retired across Germany by 2020, Merkur is a timely project and will contribute towards maintaining the country's energy supply, while catering to the long-term shift towards renewables in the power generation mix. On this project we have strong and experienced equipment and engineering partners, as well as equity partners, and look forward to working with them to successfully complete Merkur."

Alain Bernard, Director and Chief Executive Officer of the DEME Group, said:

“With our investments in the Merkur project, DEME continues to be at the forefront of offshore wind energy developments in Germany and beyond. GeoSea, DEME’s specialist in complex offshore marine engineering projects, will realize the construction of Merkur Offshore. Our specialist team in Bremen will play a major role in the execution of the project, contributing significantly to Germany’s energy transition plans.”

Jérôme Pécresse, President and CEO of GE Renewable Energy, said:

"This is a significant milestone for both the Merkur Offshore project and the European offshore wind industry. Securing this funding ensures the first large-scale commercial deployment of our state-of-the-art Haliade 150-6MW offshore wind turbine in Europe. The Merkur project also signals our continued commitment to the development of offshore wind farms around the world."

Stephane Kofman, Director, Infrastructure at InfraRed, stated:

“InfraRed is pleased to be working with strong partners and is looking forward to the successful development and construction of this flagship renewable energy project. Offshore wind is a sector particularly aligned to experienced infrastructure investors such as InfraRed as it enables the application of complex structuring skills to deliver a large scale European renewable energy project that will positively contribute to a sustainable future energy source and reduce reliance on fossil fuels and nuclear power. InfraRed is pursuing similar opportunities in Europe but will also continue systematic origination activities in core target geographies including North America and Australasia.”

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