Deals: Case Studies
SeaEnergy Renewables Limited (SERL)
Lansdowne Oil & Gas plc
ACG
SeaEnergy Renewables Limited (SERL)
Chairman, Steve Remp first started investigating the potential for offshore renewables in 2004, through a personally financed feasibility study outside of the Company. That study lead to an initial focus on tidal power generation, Steve concluded that tidal technology was some way from being proven and that offshore wind would be first to market. In 2007 PLC agreed to acquire SERL from Steve for £35,000 (its past costs) and it became a part of the Group. Shortly thereafter we linked up with the key members of the team of individuals that had conceived, designed, installed and commissioned the Beatrice Demonstrator Project – two 5MW turbines in 45m of water in the Moray Firth - at the time the largest turbines ever built.
The Beatrice Demonstrator Project proved that the technology already existed, that deep water offshore wind was possible here and now and that the skills and experience garnered from many years operating offshore in oil and gas and oil services would be invaluable in helping deliver that vision.
One of the Company’s major shareholders LC Capital Master Fund (LC) provided the seed capital by way of an initial £2m loan facility and by June 2008 we had employed most of the Beatrice Demonstrator team, given key management a stake in the Company and formally launched SERL.
The team very quickly secure major utility partners, SSE and RWE and successfully bid and won two wind farm sites offshore Scotland in Scottish Territorial Waters Round. The two sites, Beatrice and Inch Cape, had a total capacity of 1825MW and with a 25% interest in each SER had secured 456MW inside of 9 months from launch.
A new utility partner EDPR was secured in 2009 to bid for sites in The Crown Estate’s Round 3 process, and resulted in the award of the 1300MW Moray Firth site in January 2010. Again SERL has a 25% stake or 325MW.
A foothold in the Far East was also established and SERL won the best new business award at the 2010 Scottish Green Energy Awards and the Company of the year award at the 2010 Rosenblatt Awards.
Our initial objective was to try and fund our interests in these projects at least until they were consented, moving them up the valuation curve creating value for our shareholders by exiting or selling down, at that point. We approached institutional shareholders in the first half of 2010 to try to secure the funds required to achieve that objective but the time horizon for these projects to generate electricity (6/7 years) was too far away and the required support from the equity markets was not there.
The Board concluded that an early sale of SERL was the best way to secure the value that we had created and LC extended both the length and amount of their loan facility to allow a formal competitive process to be coordinated by the Renewable Energy Group of Ernst & Young.
That process concluded in June 2011 with the sale of our interest in SERL to Repsol, acting on behalf of a consortium with EDPR. The sale valued SERL at an enterprise value £50m. SeaEnergy PLC fully recovered its £8.1m investment in SERL and secured additional cash consideration of £30.5m, all just over 3 years from the launch of SERL.