APG, ADIA, and CalSTRS Take Over Merged Capital Dynamics’ Massive Clean Energy Platform

Posted on 08/17/2021


Arevon Energy, Inc. is a renewable energy company that was launched through the combination of Capital Dynamics’ U.S. Clean Energy Infrastructure (CEI US) team and Arevon Asset Management, Capital Dynamics’ former exclusive energy asset management affiliate. John Breckenridge, previously a Senior Managing Director and Head of Clean Energy Infrastructure at Capital Dynamics, will lead the new entity as Chief Executive Officer. Before Capital Dynamics, Breckenridge worked a Good Energies now the Bregal Energy Fund. The transaction is subject to regulatory approvals and is expected to close by early 2022.

Arevon Energy is 100% owned by an investor group comprised of APG Asset Management, the California State Teachers’ Retirement System (CalSTRS), and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA). The institutional investors are now owners of the U.S. clean energy platform, enabling the allocators greater economics. This mix of public pension and sovereign wealth fund capital will own renewable energy asses in states such as Nevada and California.

Arevon will continue to provide consulting and support services to other generation assets for Capital Dynamics. Arevon Energy is headquartered in Scottsdale, Arizona, and New York City.

Platform

Arevon will support a standalone clean energy platform of 4.5 GW of operating, under construction, and late-stage development solar and battery storage projects, as well as a 3.0 GW pipeline. The transaction is subject to regulatory approvals and is expected to close by early 2022. Arevon has a team of more than 100 employees.

In June 2021, Arevon Asset Management opened the Saticoy battery energy storage system. It is one of the largest grid-scale battery energy storage sites in the United States. The electricity from the site is supplied to Southern California Edison (SCE) under the terms of a 20-year purchase and sale agreement. The project was initially conceived of and developed by Strata Clean Energy.

Advisors

Ropes & Gray acted as legal counsel to the Investor Group.

Background Deals

ADIA, APG, and CalSTRS invested in Clean Energy Infrastructure V JV LLC, which closed at US$ 1.2 billion in January 2017. On June 19, 2018, Clean Energy Infrastructure V JV LLC acquired 8point3 Energy Partners LP, a listed San Jose, California-based limited partnership that owns, operates, and acquires solar energy generation projects. The sellers, or major selling selling shareholders of 8point3 were First Solar, Inc. and SunPower Corporation. At the time, 8point3 Energy Partners has a collection of 13 projects totaling 660 megawatt-DC located across the U.S.

On March 29, 2017, First Solar completed the sale of the cash equity interests in the 250 Megawatt (MW) Moapa Southern Paiute Solar Project in Nevada to Capital Dynamics. First Solar bought the solar power plant in 2013 from K Road Power Holdings. The solar power plant is located on the Moapa River Indian Reservation approximately 30 miles north of Las Vegas. The facility began operating in December 2016 and sells its entire output to Los Angeles Department of Water and Power(LADWP) under a 25-year power purchase agreement. CalSTRS and APG were also significant equity participants in the project. AllianzGI, on behalf of its clients, was the anchor investor alongside a group of institutional investors that provided funding to refinance a portion of the acquisition price. The transaction was executed as a “back-leverage” loan in order to tailor the solution to the structure that Capital Dynamics had in place.

Capital Dynamics acquired the Beacon II and Beacon V Solar Projects in Kern County, California, project from SunEdison in February 2016.

Other investments by Capital Dynamics include Mount Signal 3 Solar, a 328 megawatt-DC project in Calexico, California and California Flats Solar, a 374 megawatt-DC project located in Hearst Communications’ Jack Ranch in the Cholame Hills in California. First Solar sold the California Flats Solar Project to Capital Dynamics in August 2017.

The trio investors were also invested in Clean Energy Infrastructure VII JV LLC, which raised US$ 1.2 billion. CEI VII is a successor fund to CEI V. These CEI funds invested in U.S. later stage, utility-scale renewable energy generation projects. At 2018, Capital Dynamics’ Clean Energy Infrastructure team oversaw 5 of the 15 largest solar power plants in the U.S.

Capital Dynamics

Founded in 1999, Capital Dynamics is a global private asset management firm based in Zug, Switzerland. Its history dates back to 1988 when the predecessor of Capital Dynamics commenced operations in Birmingham, UK (Westport Private Equity). Capital Dynamics established a clean energy infrastructure platform in 2010, for direct investments in real assets within the renewable energy sector. In 2017, a private credit asset business was launched that leveraged the Capital Dynamics’ extensive general partner relationship network to originate and invest in private credit transactions for middle-market companies owned by private equity sponsors. In 2018, Capital Dynamics expanded its energy infrastructure business to include energy infrastructure credit. Capital Dynamics comprises Capital Dynamics Holding AG and its affiliates.

ADIA

ADIA has been a supporter of renewable energy investments. Renewable energy is an area of keen interest for ADIA and they have built a sizeable, global portfolio in the sector. ADIA had invested in ReNew Power Ltd, a Gurugram, Haryana-based renewable power projects developer.

Keywords: California State Teachers Retirement System.

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