Sentio Partners has advised the shareholders of Renewable Heat Generation Limited (“RHGL”) on their sale of the business to Kyotherm, a European equity investment company based in Paris, who specialise in the development and operation of sustainable heat and energy efficiency projects.
RHGL, headquartered in Harrogate, is one of the UK’s largest independent owners of wood pellet fuelled biomass boilers with over 100 installations in 53 care homes across England, Scotland and Northern Ireland. Founded in 2013, RHGL’s innovative business model has allowed it’s care homes customers to access reliable and affordable heat generated from renewable sources replacing old and inefficient gas or oil facilities. Over the next 20 years the business is expected to deliver over 450 GWh of sustainable heat.
The acquisition of RHGL compliments Kyotherm’s existing portfolio which represent a total capacity of 70MW producing over 160 GWh/year in renewable energy or energy efficiency both in the UK and across Europe. Kyotherm has ambitious plans for growth in the UK which include acquiring and developing both biomass and ground source heat pump-based installations.
The acquisition of RHGL was part funded through a long-term project finance facility of £5.8m from Clydesdale Bank plus an undisclosed level of equity from Kyotherm. It is the second heat transaction completed between Clydesdale Bank and Kyotherm in the last 3 months.
Advisors on the transaction included Ian Marwood and Matt Tollefson of Sentio Partners (lead advisors to sellers), David Strachan and Karen Crutchley of Schofield Sweeney Legal (sellers), Gareth Baker of Gowling WLG (Kyotherm), and Keith Patterson of Brodies LLP (Bank).
Ian Marwood commented:
“Over the last six years the shareholders have built a highly successful business contributing to the UK’s shift away from fossil fuels and the achievement of government targets for renewable energy. The business has now matured, and this represents the perfect time for the shareholders to realise the value they have created. Kyotherm is well placed to take the business forward as part of its ambitious renewables strategy.”
Thibault Chevallier commented:
“The acquisition will strengthen Kyotherm’s presence in the UK with a diversified, well-structured and high-quality portfolio of assets. The strong and ambitious government support in the UK towards renewable heat is key in the promotion of such initiatives by attracting competitive capital, thus enabling the production of clean and affordable energy on the long term.”
Keith Wilson, Head of Renewable Energy at Clydesdale Bank said:
“Successful decarbonisation of the heat sector will be essential if the UK is to meet its climate change goals. Notwithstanding existing policy instruments, to date and relative to the electricity sector, the heat sector has struggled to attract low cost debt finance, with the main challenges being complexity and average ticket size. With a mid-market focus and an entrepreneurial mind-set, the heat sector represents an attractive lending opportunity and one where Clydesdale Bank can differentiate. We are delighted to have been chosen by Kyotherm to support their acquisition of RHG and look forward to supporting more acquisitions in future. We also look forward to working with other sponsors willing to take on the challenge of decarbonising heat and who can help the Bank deliver its objective of making a meaningful contribution to dealing with the issue of climate change”.