In March 2023, INPEX Corporation acquired a 16.7 percent stake in the Moray East Offshore Wind Farm, which is currently in operation off the coast of Scotland, with an installed capacity of 950MW produced by one hundred 9.5-megawatt units. Priced at an estimated GBP400m, indicating a total equity value of approximately GBP2.4bn, the acquisition was carried out through INPEX Renewable Energy Europe Limited. The wind farm had commenced operations in 2021 and reached full operation on 1st April 2022, having already significantly grown its revenues and EBITDA, as seen in Table 1. 2022 Financials (estimated) show expected revenues of more than GBP450M and a sharp increase in EBITDA.
Table 1: Moray Offshore Windfarm (source: infraMetrics®)
| Year | 2022 (estimated) | 2021 | 2020 | 2019 |
| Sales | GBP 477M* see (a) | GBP184M** | Nil | Nil |
| EBITDA | GBP399M see (b) | GBP160M | GBP2M | GBP2M |
| Total Assets | GBP3,179M see (b) | GBP3,230M | GBP2,438M | GBP1,363M |
*Note that this is an estimate and the actual revenue generation may be influenced by various factors such as changes in the energy market and weather conditions. Please keep in mind that the projections are subject to uncertainty. ** For six 6 months of operation.
Using infraMetrics® Comps, we can benchmark the transaction price for Wind Farms in the UK. As always, to retain robustness while achieving granularity, we take the mean Price/Sales and EV/EBITDA for wind farms in each dimension of the company (Size, Profits, Leverage, etc) and take the range of all these to arrive at a deal-specific comparable.
Table 2 shows that the typical valuation for UK wind farms in infraMetrics in 2022 was not that close to the price paid by INPEX, which paid a premium on a price-to-sales basis (they may expect higher average power prices than the GBP100/MWh assumed here) but paid significantly less than the recent average in terms of EV/EBITDA, which suggests expected equity returns well worth 8%.
Table 2: Price/Sales and EV/EBITDA Valuation Ranges 2022 (source: infraMetrics®)
| Equivalent Segment | Mean Price/Sales | Mean EV*/EBITDA |
| by Size (TA) | 4.2x | 10.6x |
| by level of profitability (RoA) | 3.9x | 19.4x |
| by level of leverage | 4.1x | 11.5x |
| by level of investment (Capex/TA) | 3.9x | 10.6x |
| by remaining lifetime | 4.4x | 12.0x |
| by country risk | 4.8x | 10.0x |
| Average infraMetrics® Comps | 4.3x | 12.5 |
| Observed Deal Ratio | 5.0x | 11.2x |
| Equity Value | Enterprise Value* | |
| infraMetrics Valuation | circa GBP 2,050M | circa GBP 4,990M |
| Observed Value Paid | circa GBP 2,395M | circa GBP 4,470M |
| *Enterprise value: Market value of equity + face value of debt – cash at bank | ||
Notes
- The assumptions made for estimating the total annual revenue generation of the 950 MW offshore wind project in the UK include a capacity factor of 50%, which assumes that the wind farm generates 50% of the maximum possible output if it were operating at full capacity. The calculation is based on the total electricity generated annually, multiplied by the assumed market price of GBP100/MWh (close to the current UK electricity spot price). An additional GBP61M accrued income was added to the estimated revenue, which represents the Company’s right to consideration for produced megawatt delivered to off-takers but not billed. The estimated total annual revenue generated by the wind farm at full capacity is approximately GBP477M.
- Assuming no new additions to the company’s total assets and a full year’s depreciation, the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of the company considers the estimated revenue growth of 159% over the previous year.
