Perth-based utility company SSE yesterday sold off its gas pipelines business to a new clean energy focussed infrastructure fund in a £52.7 million deal.
Scottish Equity Partners said it had raised a total of £135m for its new Environment Capital Fund and SSE Pipelines would be the anchor investment.
The business oversees more than 130,000 gas connections to new build residential and commercial developments throughout the UK.
SEP said the balance of the fund would be ploughed into a diversified portfolio of UK-based clean energy infrastructure projects, with hydro power, energy efficiency schemes, heat pumps and district heating schemes among potential investment targets.
SSE yesterday said the sale of its pipelines business had been completed as part of its “value programme” announced earlier this year which will see a number of non-core assets disposed of.
However, SSE will continued to have an interest in the operation of the pipelines business after it committed £13.8m to take a significant minority stake in ECF.
The new fund has also received the backing of a syndicate of financial investors led by Lexington Partners, the world’s largest independent manager of secondary private equity and co-investment funds.
“We have identified a range of assets and businesses which are not core to SSE’s future plans and this disposal represents the latest step in the programme to significantly simplify the SSE group and secure proceeds and debt reduction estimated to total around £1bn,” SSE finance director Gregor Alexander said.
“We are delighted to have the opportunity to complete the disposal and, at the same time, participate in SEP’s new fund targeted at small-scale clean energy projects throughout the UK.
“This transaction will ensure resources are fully focused on what is important and relevant to SSE’s core purpose of providing the energy people need in a reliable and sustainable way whilst supporting future investment in clean energy.”
The ECF – which will be headed up by Gary Le Seur – is seen as complementary to Glasgow-based SEP’s Environmental Energies Fund which launched in 2011 and also acquired a portfolio of venture capital and private equity cleantech investments from SSE.
“This is another significant fund for us, which helps to broaden our reach without undermining our core focus,” SEP managing partner Calum Paterson said yesterday.
“We are particularly pleased to extend our successful partnerships with SSE and Lexington Partners.
“The market opportunity for energy infrastructure finance is very attractive, and the new fund fits well with our existing activities.”
Marshall Parke, Lexington’s managing partner at its London office, said the fund manager was pleased to be involved.
He said: “This is the second time Lexington has partnered up with SEP and SSE in an innovative secondary transaction, this time for the infrastructure and clean energy sectors.
“Both sectors are relatively new to the secondary market, and areas in which we expect to see more secondary activity in the future.”