Korean consortium to provide $142 mn UK solar refinancing: report

A consortium led by Korea Investment & Securities Co. Ltd. will provide UK-based Octopus Investments with 160 billion won ($142 million) solar portfolio refinancing consisting of equity and senior debt, according to a local news report.

Korea Investment will invest 50 billion won in equity and underwrite a 110 billion won senior debt on the portfolio of 15 solar farms operated by the British investment company in southern England, edaily said on July 30.

The brokerage house will resell the senior note to Samsung Fire & Marine Insurance Co. Ltd. and other South Korean insurance companies, offering a target IRR of between 4% and 4.5%.

For Octopus Investments, the deal marked the first solar refinancing it secured from Korea Investment. It has relied mainly on European banks, including National Westminster Bank and BNP Paribas, to refinance debts on renewable energy projects.

Korea Investment plans to focus global investment toward the British energy sector, seen as a niche market.

“Renewable energy projects in Britain are reaching the refinancing phase of their debt cycles,” edaily quoted an unnamed Korea Investment source as saying.

“We expect valuations of solar power plants in Britain to go up further as stable investment assets subsidized by the government.”

The UK runs two key subsidy packages for solar power generation – the Renewables Obligation scheme and the Feed in Tariff (FIT) scheme. But the British government has proposed cutting aid to small-scale solar power installations and ending subsidies for roof-top panels supported by the FIT scheme.

Earlier this year, the Construction Workers Mutual Aid Association (CWMA) and Korea Investment & Securities Co. Ltd. have invested around 38 billion won ($36 million) to acquire a portfolio of four small-scale solar power plants in southern England. The investment is expected to deliver an annual return in the 7% range over the next two decades.