UK life insurance giant Standard Life has provided long-term financing for a biomass power facility, with the infrastructure assets being matching adjustment eligible.
Standard Life, a life insurance and retirement specialist managing some £317bn in assets, has provided £61m of financing against the Snetterton Renewable Energy Plant, a biomass power facility in Norfolk, led by Octopus Capital.
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The deal stands out for its matching adjustment-eligible structure. Under the UK’s Solvency regime for insurers, the matching adjustment allows insurers to recognise part of the spread earned on eligible assets when valuing certain long-term insurance liabilities. This can make long-term, predictable cashflow-generating assets more attractive to insurers.
Standard Life said the latest transaction offered greater certainty of contractual cashflows while maintaining exposure to investment-grade infrastructure assets.
Manuel Dusina, head of Real Assets at Standard Life, explained: "This transaction represents an important milestone for Standard Life and demonstrates how innovative structuring can create new opportunities for pension and insurance capital to access infrastructure investments. By combining real estate and infrastructure expertise, we have developed an innovative Project Infrastructure financing structure that provides the long-term, predictable cashflows our customers need while supporting sustainable investment in essential UK infrastructure.”
The deal represents the first investment by Standard Life utilising this new infrastructure financing structure. The investor aims to generate a blueprint that can be replicated across other investment opportunities, paving the way for insurers to allocate more capital to alternatives such as infrastructure.
