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Macquarie sells stake in undersea cable to Mitsubishi

The deal turns Mitsubishi into the first Japanese company operating an overseas offshore transmission cable. Macquarie sold its 50 percent stake in the UK’s £105m Walney 1 project.

Macquarie Capital Group has sold its 50 percent interest in the Walney 1 offshore undersea transmission cable, located in the UK, to Tokyo-headquartered Mitsubishi Corporation for an undisclosed amount.

Mitsubishi says the deal turns it into the first Japanese company operating an overseas offshore transmission cable.

Macquarie and Barclays Integrated Infrastructure Fund originally bought the undersea cable in late October for £105.4 million (€123 million; $164 million) from utilities DONG and Scottish and Southern Energy as well as OPW, a joint venture between Dutch pension provider PGGM and renewable fund Ampere Equity Fund. The sellers are the owners of the Walney 1 wind farm.

Mitsubishi now co-owns the 20-year concession to operate the 50-kilometre long cable connecting the Walney 1 wind farm – a 51-turbine wind farm in the East Irish Sea – to Lancaster Coast.

UK regulator Ofgem has been tendering several offshore transmission links under its Offshore Transmission Owner (OFTO) regime. The regulator has already awarded four licences for transmission links to offshore wind farms as part of a £1.1 billion, nine-licence scheme.

Prior to Walney 1, the most recent OFTO scheme to be awarded was the link to Barrow offshore wind farm, won by Transmission Capital Partners, a team comprising International Public Partnerships Limited (INPP), its investment adviser Amber Infrastructure and transmission developer and adviser Transmission Capital. Two of the other projects awarded by Ofgem – Gunfleet Sands and Robin Rigg – also went to Transmission Capital Partners.

Past OFTO contracts have attracted infrastructure investors due to their availability-based revenue streams with protected downside and full linkage to the UK Retail Price Index; the absence of demand risk and lack of exposure to the associated wind farm performance or credit risk; and guaranteed revenues by National Grid Electricity Transmission, a subsidiary of the National Grid.

Mitsubishi in 2010 made infrastructure part of its corporate strategy and is pushing to expand its presence in the offshore space, particularly in the UK. The Japanese company straddles a variety of industries including metals, logistics and finance, to name just a few.