UK - Ade to independent wind farms?

Investment firm 3i Infrastructure Limited has today confirmed it has approached renewable energy company Novera and is considering a £112m cash offer for the firm.

In a statement on Novera's website the investment company said that in the wake of recent press speculation it could confirm it was mulling a 90p per share offer through its wholly-owned subsidiary Harrier Acquisitions Limited.

The statement follows an announcement from Novera's board on Friday revealing it had been approached about a deal. However, the company stressed that "the making of any formal offer is subject to a number of pre-conditions which Novera is currently seeking to address (although there is no certainty that these pre-conditions will be satisfied or waived)".

After climbing over 26 per cent on Friday to 79p, shares in the AIM-listed Novera continued to climb today, clearing 87p a share at the time of going to press.

Novera is one of the UK's leading independent renewable energy companies and wind farm operators. The firm currently operates a 14.5Mw farm in Wales, has a 30Mw farm under construction in Yorkshire and a further four farms at the planning stage with a goal of generating 250Mw a year by 2011. The company also operates 45 landfill gas energy generation facilities across the UK and is planning a waste-to-energy power station in East London.

The approach for Novera comes as Scottish and Southern Energy (SSE) on Friday announced it had completed its €1.1bn acquisition of Ireland-based wind farm operator Airtricity.

Tariq Akbar, senior energy analyst at research firm Datamonitor, said that further M&A activity in the renewable energy sector was now on the cards as larger energy suppliers seek a quick way of meeting their green energy targets and private equity firms seek to exploit a consolidating market.

"The likelihood is that the smaller renewable energy players will be gobbled up by the big boys as acquisition is the easiest way to help meet their carbon targets," he explained. "Private equity has also got increasingly involved in these smaller companies in the past few years, because the possibility of being acquired by the big energy companies looks like an attractive exit strategy for any investment."

Dale Vince, managing director of green energy provider Ecotricity, said there was a chance that large energy utilities would snap up independent wind farm operators, but noted that it was equally likely new start ups would emerge to take the place of acquired firms. "The big guys find it easier to acquire than do the spade work so perhaps there will always be an indie sector while wind energy faces such huge planning hurdles and requires real commitment," he observed.