Resonance announces third close, at US$300m, of its innovative industrial water infrastructure fund

                                                                                                                                                      London, July 4, 2016. Resonance, a real assets investment management firm affiliated with Fidante Partners, today announced the third close of Resonance Industrial Water Infrastructure Limited. Commitments of US$300 million from six institutional investors from the UK, US and Nordics, demonstrate investor appetite to participate in the US$53 billion global industrial water treatment industry, which is expected to grow at 8.6% per annum until 2020[1].

This is the first institutional fund exclusively focused on financing industrial water infrastructure projects in Europe, south east Asia, China, Australia and New Zealand.

The fund provides equity capital to finance the design and build of specialised industrial water treatment plants co-located with industrial users. Its industrial partners operate water treatment plants under long term contracts using the industry-standard build, operate and transfer (BOT) framework. Operator partners use the latest water treatment solutions and have proven track records in operating industrial plants.

Industrial users benefit from outsourcing water treatment because they reduce capital expenditure requirements, transfer operating risk and can rely on the extensive and up-to-date knowledge of plant operators to optimize their water treatment processes and water cycle management. In addition, the fund exploits the financing gap produced by the financial crisis.

Resonance expects to further deploy the fund’s capital by building a diversified portfolio of 10 to 15 water assets, typically US$10-50m in size, in Europe, south east Asia, China, Australia and New Zealand. 

These investments will contribute to delivering greater sustainability in local water resources by reducing industrial pollution of water courses, increasing the supply of fresh water to industry, and recovering valuable by products e.g. salts, metals and energy. As a signatory to the UN Principles for Responsible Investment (UN PRI), Resonance will manage the fund in accordance with its responsible investment policy.

Nick Wood, CEO and founder of Resonance, describes the investment opportunity: “Demand for outsourced water treatment services is being driven by increasing government regulation of discharged water and by water scarcity.  In certain regions, industrial businesses are increasingly concerned that they cannot obtain enough water to operate their facilities reliably.  Firms continue to invest in new facilities to meet these challenges.”

Phil Peters, managing director at Fidante Partners Europe, said: “We have had a lot of interest from institutional investors in this opportunity. Pension funds, endowments, and funds with an ESG policy are looking for strong investment ideas, and this appeals because of the water industry’s investment characteristics and growth potential. Real assets continue to be an area of growth for us.”

One of the fund’s investors, Mikael Angberg, CIO of AP1, commented on its commitment to the fund as part of its wider strategy of promoting sustainable investment: “Water scarcity and water treatment issues are cornerstones of AP1's resource efficiency-focused sustainability strategy. We are therefore very excited to be partnering with Resonance in the first institutional fund exclusively focused on financing industrial water infrastructure projects.”

Vikram Aggarwal, alternatives investment manager at BAE Systems Pension Funds Investment Management, said: “This investment represents a compelling way of marrying attractive risk-adjusted returns with delivering socially useful outcomes. Generalist infrastructure funds have historically overlooked this area, mainly because projects are considered too small and bespoke. However, we are delighted to partner with the Resonance team, who have the expertise and commitment to do such deals and provide capital to an under-served part of the market.”

Lydia Whyatt, the managing director of water investments at Resonance, with more than 10 years’ experience investing in the water sector, originated this investment theme and brought it to Resonance. She also put together an experienced team to execute it, including Herman Cai in Hong Kong and Michael Froud in Singapore. Both have extensive water industry, operating and investment experience. 

Lydia commented: “The team’s experience and relationships with its partners, which include water plant operators and technology providers, mean that Resonance can reliably identify strong investment opportunities for the fund. The first investment of the fund is in a coal-to-chemical waste water reuse plant in China.

In addition, the Resonance team works closely with Amane Advisors, a leading global advisory firm focused on the water industry. The founder of Amane, Thierry Noel, strongly believes that this fund brings much needed capital to industry for financing of water assets: “I am pleased to be able to bring capital to the water industry and financing solutions meeting the specific requirements of the water market. We worked closely with Lydia, Nick and the team to make this happen, and I am delighted to see it up and running”. Amane provides Resonance with access to a network of over 120 water and waste industry professionals worldwide with offices in the UK, France, China, Bahrain, the USA and Singapore. 

For further information, please contact:

 Louise Collins, Fidante Partners (Europe)

lcollins@fidante.com, Tel: +44 (0)20 7832 0961

Gay Collins, Montfort Communications

fidante@montfort.london, Tel: +44 (0)7798 626282

Resonance Asset Management

Resonance Asset Management Limited was founded in 2012 by Nick Wood, a former senior executive at Man Group plc, where he was founder and CEO of Man Environmental Capital Opportunities.

Resonance is an alternative asset management firm focused on originating, distributing and managing real asset investment funds for institutional investors.  The firm invests in long term, cash generative real asset investments that deliver yield and diversification that is valuable to institutional investors.

Resonance has approximately US$450m of AUM in renewable energy and water treatment assets.

Resonance Industrial Water Infrastructure Limited is an unlisted company registered with the Guernsey Financial Services Commission as a collective investment scheme. The Fund is managed by Resonance Asset Management Limited.

Resonance Asset Management Limited is authorised and regulated by the Financial Conduct Authority.

Further information about Resonance can be found at www.resonanceassetmanagement.com

More information about the Fund for potential industrial partners is available at www.resonancewaterfund.com

Fidante Partners (Europe)

Fidante Partners is an alternatives investment management company that partners with specialist asset management firms to deliver compelling opportunities to an international investor base.

Fidante Partners supports 15 specialist asset managers, located in Australia and the UK, managing US$31.8 billion (as at 31 March 2016) across numerous asset classes including fixed income, equities and alternative asset strategies. Fidante Partners is fully owned by Challenger Limited in Australia, an ASX-listed investment management firm established in 1985 with AUM of US$43.9bn (as at 31 March 2016).

www.fidante.com 

Amane Advisors

Amane Advisors is an advisory firm dedicated to the water industry. Profound industry experience makes it possible to provide focused and effective expertise to many clients ranging from global corporations, to technology start-ups, investors, operators, engineering firms, institutions and public agencies.

Amane Advisors is the advisory arm of Global Water Intelligence, the world leader in market intelligence in the water industry.

For more information, please consult www.amaneadvisors.com 

[1] Source: Global Water Intelligence Report 2015

ACQUISITION OF STANDFORD HILL AND OAKDALE WIND FARMS

InfraRed Capital Partners and OPTrust have completed the sale of two FiT-accredited operational wind farms, Standford Hill and Oakdale, to Resonance British Wind Energy Income Limited, a Guernsey based closed-ended investment company.

JLL’s Renewable Energy Capital team acted as lead advisor to InfraRed Capital Partners and OPTrust, on the disposal of two jointly owned operational onshore wind projects, both located in the UK and totalling almost 10MW in capacity.

Standford Hill is a two-turbine, 4.6MW development at HMP Standford Hill on the Isle of Sheppey in Kent and has been operational since 2013. Oakdale is a two-turbine, 4MW development at Oakdale Business Park in Caerphilly, Wales and has been operational since 2014.

Nick Wood added, “These assets are a natural fit for our fund, which invests in operating onshore UK wind farms. They provide access to long-term, inflation linked cash flows that our investors are looking for. ”

“This transaction illustrates the success of Partnerships for Renewables’ strategy to develop attractive and high quality onshore wind projects across the UK in close partnership with its public sector land owners,” said Morgan McCormick, Managing Director, OPTrust.

James Hall-Smith on behalf of InfraRed added, “The sale of these projects is consistent with our environmental infrastructure fund’s strategy of selling assets once they are operational and substantially de-risked.”

Christopher Shead, Director in JLL’s Renewable Energy Capital team, added “the sale of these projects demonstrates the attractiveness of the Feed-in-Tariff as a long-term investment class”

This acquisition brings the total number of wind projects held by Resonance British Wind Energy Income Limited to nine, totalling 43.3MW of installed capacity

 

RESONANCE FEATURED IN GLOBAL WATER INTELLIGENCE MAGAZINE

Nick Wood and Lydia Whyatt give their views on current industry trends and where deal flow will come from for the firm’s recently launched Resonance Industrial Water Infrastructure Fund.

In the article Nick Wood explains: “The whole theme of real assets is gaining in importance amongst institutional investors, because it provides them with an income stream that isn’t necessarily correlated to investments they already have”.  He adds: “Some of those investors are particularly attracted by the environmental benefits that water investments can deliver to industry”.

The article sheds light on the fund’s initial project flow, and discusses opportunities in Europe and Asia.  Lydia Whyatt comments : “A key driver in Asia is the fact that a lot of corporates don’t have expertise in wastewater treatment, and hence they would rather outsource it to somebody who knows how to do it”.  In addition, there is an established infrastructure base in Europe which needs upgrading to meet regulatory standards.

 

RESONANCE LAUNCH NEW FUND INVESTING IN INDUSTRIAL WATER INFRASTRUCTURE

Resonance announce commitments in excess of $100m from four anchor investors following the initial close of its second investment fund, Resonance Industrial Water Infrastructure Limited.  Hard capped at $500m, the fund is focused on the creation of a portfolio of investments in water assets operated under long term outsourcing agreements with clients in the process industries.  The fund is open for further subscriptions until July 2016.

Nick Wood describes the background to the investment opportunity: “Demand for outsourced water treatment services is being driven by increasing government regulation of discharged water and by water scarcity.  In certain regions, industrial businesses are becoming concerned that they cannot obtain sufficient water to operate their facilities reliably.  As a result, many continue to invest in new facilities to meet these challenges and as a result, the global industrial water treatment industry is currently worth US$53 billion per annum and is expected to grow at 8.6% per annum until 2020 according to a Global Water Intelligence Report of 2015”.

Resonance expect to build a diversified portfolio of 15 to 25 water assets, typically US$10-30m in size, across Europe, SE Asia, China and Australia.  These investments will contribute to delivering greater sustainability in local water resources by reducing potentially polluting water discharges and recycling process water used in production.

As a signatory to the UN PRI, Resonance will manage the fund in accordance with its own Responsible Investment Policy.

 

 

RECORD SUMMERTIME WIND GENERATION

The renewable energy industry contributed nearly one fifth of the UK’s electricity mix in the first quarter 2014. New statistics from DECC revealed renewable technologies produced 18.1TWh of clean energy, a 43% rise compared to the same period in 2013. Electricity produced from onshore wind increased by 62% in the first quarter to 6.6TWh.

On 17th August, 22% of the UK’s electricity was generated by wind alone (onshore and off), beating the previous 24-hour record of 21% set on 11th August. Before that, the record stood at 20%, set on 20th December 2013. This is enough to power more than 15 million homes at this time of year, according to the statistics from National Grid. During this day wind was generating a greater proportion of the UK’s electricity needs than coal (13%), solar (3%), biomass (3%) and hydro (1%). Nuclear generated 24% and gas 26%. This record generation is a result of increased installed capacity and above average wind speeds (partly due to Hurricane Bertha).

 

ACQUISITION OF NEWTON OF FORTRIE WIND FARM

On 30th July, the Resonance British Wind Energy Income Fund acquired Newton of Fortrie Wind Farm, bringing the fund’s onshore wind portfolio up to seven wind farms. Newton of Fortrie was developed by Muirden Energy LLP, is located in Aberdeenshire and has a nameplate capacity of 6.9MW from three Enercon E70 turbines. Newton of Fortrie was commissioned in March 2013. Resonance Asset Management continues to seek further investments in UK onshore wind farms for the fund.

RECORD RENEWABLE ENERGY PRODUCTION IN THE UK

Electricity produced by renewable technologies rose by 43% year on year in the first quarter of 2014 to reach a record 19.4% share of the total energy mix, UK government figures show. This performance marked a 1.5 percentage point increase on the previous record of 17.9% recorded in the last quarter of 2013 and took renewable electricity generation to a record 18.1 TWh.

Meanwhile, generation from gas dropped almost 20%, while coal fell just under 17% and nuclear almost 10%. Onshore wind generation increased 62%, offshore wind by 53%, and solar PV, wave and tidal – grouped together in the report – grew 76%

 

ACQUISITION OF ARNISH MOOR WIND FARM

On 23 May, the Resonance British Wind Energy Income Fund completed the acquisition of Arnish Moor Wind Farm. The wind farm was owned by a private individual and managed by FIM Ltd. The wind farm was commissioned in November 2006. It is located near Stornoway on the Isle of Lewis and has a nameplate generating capacity of 3.9MW from three Nordex N60 turbines. This sixth acquisition takes the fund’s generating capacity to 27.8MW. The fund continues to seek further onshore wind farm assets within the UK between 2 and 10MW capacity.

RESONANCE ACQUIRES INDUSTRIAL WIND PORTFOLIO FROM HG CAPITAL

London, 13 January 2014. HgCapital, the European sector-focused private equity and renewable energy investor, has today announced the sale, finalised at the end of December 2013, of three operating UK onshore wind farms to funds advised by Resonance Asset Management for an undisclosed sum.

The three wind farms, located on industrial sites in Cumbria, Lancashire and South Wales, have a capacity of 11.05MW. The investments were made by HgCapital Renewable Power Partners, HgCapital’s first renewable energy fund. The sale completes the exit of the fund’s UK investments following the sale of the RidgeWind investment to Munich Re and Blue Energy.

Commenting on the sale Tom Murley, Head of HgCapital’s renewable energy team said:
“We originally started developing the UK wind portfolio in 2004, focusing on high quality sites and driving operational performance. Now mature and de-risked, these assets provide a sound operating base that will generate stable, inflation-linked cash flows for another 20 years, which is of increasing interest to investors like Resonance.”

Nick Wood, founder and CIO of Resonance commented:
“This is our third investment in the UK onshore wind sector. These high quality assets match our investment objectives of consolidating the fragmented UK small and medium-sized wind farm industry to create a diversified, income generating, real asset portfolio for our institutional investors.”

The portfolio includes two 2MW wind turbines located at the Eastman Chemical Co. site in Workington, Cumbria, two 2.5MW wind turbines located at the Eastman Chemical Co. site in Newport, South Wales, and one 2.05MW turbine located at the Dewlay cheese production facility in Garstang, Lancashire.

Rob de Laszlo, Andrew Clements and Olivier Delpon de Vaux led the sales transaction for HgCapital. Ernst & Young LLP was HgCapital’s financial advisor and Norton Rose LLP its legal advisor. Deloitte LLP and Wind Prospect Group also advised HgCapital on the transaction.

Nick Wood, Francesca Collins and Orlando Hilton led the investment for Resonance. Pinsent Masons acted as legal advisor to Resonance and its funds.

 

CLOSING FUND AT $100M; 4 WIND FARM ACQUISITIONS

Exceeding expectations for its first year investing, Resonance Asset Management Ltd (“Resonance”), the alternative asset management firm specialising in real assets, today announces the completion of the acquisition of four operating wind farms by the Resonance British Wind Energy Income Fund (the “Fund”). Institutional investors have committed $100mm to the Fund in just 10 months.

The Fund is consolidating the fragmented ownership of operating small and medium-sized wind farms in the UK with generating capacity of 2MW to 10MW. The Fund, advised by Resonance, is ungeared and pays out all generated income to investors.

Investors in the Fund are seeking regular income that is linked to the price of wholesale electricity in the UK and the subsidies from the Renewable Obligation regime. The Fund’s investors are pension funds, both corporate and local government, insurance funds and family offices. The investors reside in the UK and Europe. Investors seek the secure, long term and inflation-linked income from an ungeared portfolio of operating wind farms in a politically stable environment.

Resonance founder and chief executive Nick Wood commented: “We’ve had a defining 2013, having seen an increase in commitments to $100m from institutional investors. With a combined five acquisitions under our belt, totalling 23.9MW in just one year, we’re actively considering further investments and continue to see attractive risk adjusted returns in this area for our investors. We very much look forward to further advancing our position in 2014.”

Bettyhill Wind Farm has a capacity of 6MW, made up of two 3MW Enercon E-82 E3 turbines. It is located approximately 50 miles west of Wick on the north Scottish coast. It was developed by North British Windpower and Invenergy LLC of Chicago, USA.

The 11MW portfolio, the second acquisition, comprises five turbines across three industrial sites. The sites were originally developed through a joint venture between HgCapital and Wind Direct, a subsidiary of Wind Prospect Group Ltd. Workington Energy Limited is based on the Eastman Chemical site in Cumbria. It consists of two REpower MM82s and has a capacity of 4MW. Newport Wind Direct Limited is located on the Eastman Chemical site in Newport and has a capacity of 5MW, from two Nordex N90s. Garstang Wind Direct Limited is situated at the Dewlay Cheese Factory in Lancashire and consists of one REPower MM82, giving it a capacity of 2.05MW.

RECORD WIND POWER GENERATION IN THE UK

December 2013 saw the UK produce a record amount of wind power. According to RenewableUK, the renewable industry group, a total of 2,841,080MWh of electricity was generated by wind in December alone. This supplied 10% of Britain’s total electricity demand during December. In the week of 16th December, as much as 13% of the country’s total electricity needs were supplied by wind alone, and on 21st December 17% of the UK’s total electricity demand was met solely by wind power.

Resonance’s Strath of Brydock Wind Farm, in Aberdeenshire, also had a record month. It achieved a record capacity factor of 61.11%. Despite the long period of strong and gusty winds, the wind farm achieved an availability of 99.97%, a testament to the resilience and reliability of modern multi-megawatt wind turbine systems.

 

ACQUISITION OF STRATH OF BRYDOCK WIND FARM

Following the first close of the Resonance British Wind Energy Income Fund in February 2013, the fund completed its first investment, the Strath of Brydock wind farm, on 16 April 2013. The wind farm was developed by Muirden Energy LLP and was commissioned in 2009. It is located near Banff in Aberdeenshire and has a nameplate generating capacity of 6.9MW from three Enercon E70 wind turbines.