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Decision comes after developers shunned last auction as a result of ‘global challenges’ hitting the sector

The British government has increased the subsidies available to offshore wind developers by up to two-thirds in an effort to revive new projects in a sector that is struggling with surging costs. 

The maximum price available in next year’s auction for state contracts to build offshore wind farms will be 66 per cent higher than in the 2023 bidding round, the government said on Thursday.

The government also increased the price for floating offshore wind farms, a new technology, by 52 per cent. The price rises came after developers shunned the last auction, arguing the subsidies on offer were far too low.

Claire Coutinho, the energy secretary, said ministers recognised that “global challenges” had affected offshore wind and the new auction terms would help develop “homegrown clean energy”. The government will also raise the maximum price on offer for other renewable technologies, including a 30 per cent uplift for solar farms.

The move was welcomed by industry but any increase in subsidy will ultimately be picked up by households, who are still struggling with high energy bills.

Duncan Clark, UK head at Denmark’s Ørsted, the world’s largest wind developer, said: “This is a clear indication from government that offshore wind can and will be the backbone of our future energy mix.”

Keith Anderson, chief executive of Scottish Power, one of the UK’s biggest wind farm operators, said the decision was a “welcome signal that the government [was] listening”.

Henrik Andersen, chief executive of wind turbine maker Vestas Wind Systems, said the move was an “important first step towards restoring investor confidence and getting projects back on track, which most importantly will help lower power prices in the UK.”

Developers of renewable power projects compete for state support in annual auction rounds, which offer 15-year contracts guaranteeing top-ups from bill payers if the wholesale electricity price falls below a certain level, known as the strike price. If the wholesale price is higher than the strike price, the government claws back the difference.

These long-term contracts help de-risk the upfront investment needed to build renewable generating capacity and have helped the UK develop the world’s second-largest offshore wind industry, with almost 14GW operational.

But the last auction round in September failed when not a single bid was submitted for an offshore wind project. Developers said the maximum strike price of £44 per MWh was too low to offset a surge in costs that have hit the industry globally in recent years.

Next year’s offshore contracts will have a maximum strike price of £73 per MWh. The subsidies are set in 2012 prices and index-linked, which means the maximum subsidy level is closer to £100 per MWh in today’s money, which is roughly on par with current wholesale prices.

For floating offshore wind farms, the price will be £176 per MWh, up from £116 per MWh. The technology involves placing turbines on floating platforms anchored to the seabed. It allows turbines to be placed in deeper water further out at sea where wind speeds are often higher. The technology is at an early stage, with only two pilot projects in the UK.

The maximum price for solar has been set at £61 per MWh, up from £47 per MWh in the latest round.

The UK government wants to increase UK offshore wind capacity almost fourfold to 50GW by 2030, requiring rapid development of projects.

The next auction round is set to take place next year, with results expected to be announced in September.

Great Portland turns net buyer of London property for first time in decade

High interest rates and plunging property values shake up commercial real estate market

Great Portland Estates has turned a net buyer of London property for the first time since 2013 as high interest rates and plunging property values shake up the commercial real estate market. 

Chief executive Toby Courtauld, known for a run of well-timed acquisitions during the real estate downturn after the global financial crisis, said the past six months were the “first time we’ve been a net investor . . . in a very long time”. 

“Exactly where and when we hit the trough of the market is always going to be moot. More relevant is that we are finding value,” he added. “Next year we are likely to buy more than we sell.” 

The FTSE 250 office landlord and developer has bought £123mn of property around Soho and Oxford Street as well as in Bermondsey since March and is eyeing another £700mn worth of investments.  

Commercial property values have plummeted this year as higher interest rates strain a market that benefited from decades of cheap borrowing.

GPE reported the value of its portfolio dropped 10 per cent to £2.3bn in the six months to September. 

Barclays analysts said the portfolio has been written down by 16 per cent since its peak in March 2022, noting that recent declines were steepest in its retail holdings compared with its office buildings. 

GPE’s decision to start shopping in the depressed market echoes comments by Land Securities, one of the UK’s largest listed landlords, which this week predicted buying opportunities in the coming months. 

Courtauld said its buying was focused on “old, time-expired buildings that need improvement . . . at very attractive prices”. 

The move is underpinned by strong demand from corporate tenants for high-end offices, especially in London’s West End. The company reported a 3.5 per cent vacancy rate for its office portfolio. 

GPE, which has provided offices to companies such as KKR and Glencore, said the rents agreed since March were a record 13.4 per cent higher than valuers’ estimates and upgraded its forecast for rental growth this year. It said office rents could rise as much as 8 per cent. 

The company, which is based on the historic estate of the Dukes of Portland, said it was contemplating £300mn in asset sales that would “provide additional firepower to take advantage of current market conditions”. 

“We may not see deep distress . . . like we saw after the GFC [global financial crisis] but we certainly will see some motivated sellers we think,” Courtauld said. 

Shareholder vote on $720mn buyout includes special payouts to founder Daniel Och

Shareholders of Sculptor Capital Management are poised to approve a $720mn buyout by Rithm Capital, ending an unusually contentious fight for the once high-flying hedge fund valued at $12bn when it went public in 2007.

The shareholder vote scheduled on Thursday comes a year after Sculptor, formerly known as Och-Ziff Capital Management, launched a sale process intended to ease tensions between its billionaire founder Daniel Och and chief executive Jimmy Levin, a one-time Och protégé.

Instead, the process resulted in litigation and rhetorical combat, highlighting the corporate governance challenges of companies set up as partnerships that subsequently list in public markets.

Sculptor’s board in July agreed to sell the hedge fund to Rithm at $11.15 a share. Och attacked the deal, saying it undervalued the business. He later joined ordinary shareholders in suing the Sculptor board in Delaware state court over claims of breach of fiduciary duty.

Sculptor also rejected a rival buyout offer of $13.50 a share from a group that included the hedge fund luminaries Boaz Weinstein and Bill Ackman, saying that the group had failed to demonstrate that it could complete a transaction. Och disagreed with the decision at the time, alleging the board remained beholden to Levin, who is to remain at Sculptor after the deal with Rithm closes.

Rithm boosted its proposed price for the second time to $12.70 a share last month, leading Och to withdraw from the shareholder litigation and back the amended deal.

In court papers, the ordinary shareholders described Och’s change of heart as a “betrayal” stemming from Och receiving what they described as “significant unique consideration.” On Tuesday, however, the shareholders withdrew their request for the court to halt the shareholder vote after agreeing to a settlement with Sculptor whose terms have not yet been disclosed.

Och and other founders held special units separate from ordinary shares, a legacy of Sculptor’s former life as a privately owned partnership, a structure that can introduce tensions among different stakeholders scrambling to get their portion of a fixed pot of cash offered by a buyer. 

According to securities filings, Rithm agreed to reimburse Och for $5.5mn of his expenses such as legal fees. It also agreed to guarantee an existing “tax receivable agreement”, $294mn worth of payments to Och and a group of early Och-Ziff colleagues, payable over several years.

The TRA represents the value of tax deductions that arise from the exchanges of the Och group’s partnership units into common stock. The value of the deductions to Rithm depends on the company’s ability to first generate taxable profits. Rithm, however, has agreed to make the TRA payments to the Och group regardless of its financial performance.

“TRAs can create additional complexity to an acquisition,” said Saish Setty, a former corporate lawyer now at the hedge fund Parallaxes Capital. “Since it is typically held by pre-IPO owners who may still exercise substantial control over the company’s destiny, the TRA can create a web of conflicting incentives for stakeholders. Och had substantial value in his TRA and he played a high-stakes game of chess to protect that value.”

Not all holders of Sculptor economic stakes will take home a windfall if the Rithm buyout closes. In 2019, Sculptor’s founders shifted some of their ownership interests to newer leaders. A new “Class E” unit was then created at the time as a form of deferred pay for top Sculptor employees who had sacrificed near-term cash. 

The Class E units were rendered worthless under the terms of the Rithm deal, according to Sculptor, prompting four holders to sue, claiming they are now worth $127mn.

On Tuesday, a New York state judge declined to grant a preliminary injunction to halt the shareholder vote, ruling that the foursome could pursue monetary damages from any contractual breach in the future.

Investor bought shares over the summer, when Disney stock was languishing around $80

Walt Disney DIS 3.14%increase; green up pointing triangle has attracted the interest of another activist investor that believes the company is undervalued, with ValueAct Capital accumulating a stake in the entertainment giant’s stock and initiating dialogue with its board.

ValueAct, an activist fund based in San Francisco with investments in information technology, energy, financials and media, has taken a “sizable” but so far undisclosed stake in Disney that makes it one of the fund’s biggest holdings, according to people familiar with the matter.

The fund built its position over the summer while Hollywood was shut down by dual writers’ and actors’ strikes and as Disney’s share price was languishing around $80, the people said. ValueAct continues to add to its stake.

Disney Chief Executive Bob Iger is trying to steer the company past a turbulent period and focus on building its businesses going forward. He said earlier this month that streaming, theme parks and cruises, studios and the ESPN sports network represent the four building blocks of the company’s future.

News of ValueAct’s stake was earlier reported by CNBC. Disney shares rose around 3.1% to $93.93 on Wednesday.

ValueAct believes Disney’s theme parks and consumer-products businesses alone are worth at least $80 a share, people familiar with the matter said. While it is unclear if ValueAct will seek board seats or other changes at Disney, the fund manager represents at least the third activist investor to build a significant stake in Disney in under two years.

In October, The Wall Street Journal reported that activist Nelson Peltz had joined with his friend Isaac “Ike” Perlmutter, former chairman of Marvel Entertainment, to take another run at Disney.

Peltz’s Trian Fund Management launched a proxy campaign in late 2022 seeking cost cuts and board changes at Disney, but ended it in February after Iger announced $5.5 billion in budget cuts and a head-count reduction of 7,000 across the company.

Trian’s stake in Disney is valued at more than $2.6 billion, according to a regulatory filing.

Over the summer, Peltz monitored the company’s performance. As Disney’s share price declined and analysts’ outlook dimmed, Peltz grew concerned, The Journal previously reported. He struck a deal with Perlmutter, who is one of Disney’s largest independent shareholders, allowing Peltz to add his friend’s shares to Trian’s war chest for the purposes of a new activist campaign.

Peltz is seeking multiple seats on Disney’s board. In the previous campaign, he had called for increased austerity and for the board to be more aligned with shareholder concerns. Disney hasn’t responded to the new campaign, although Iger said last week on CNBC that he had spoken to Peltz and still wasn’t sure “what Nelson is really after.”

Last summer, another activist hedge fund, Dan Loeb’s Third Point, took a large stake in Disney and pushed the company to make changes to both its board and the ESPN sports network. Loeb backed off after Disney added Carolyn Everson, a longtime digital advertising executive, to the board.

ValueAct, founded in 2000 by Jeffrey Ubben, is known for trying to work with management behind the scenes to avert potential proxy battles. Ubben stepped back from the company in 2017 and handed over the reins as CEO to his protégé Mason Morfit.

Last year, ValueAct took a 6.7% stake in the New York Times in an effort to push the publisher to more aggressively market subscriber-only content.

ValueAct Holdings, the firm’s main investment fund, has about $4.4 billion in assets under management, including large stakes in financial-technology company Fiserv and business-software maker Salesforce, worth about $853 million and $707 million, respectively, according to a regulatory filing from the end of September. The investment firm manages more than $10 billion globally.

Earlier this year, Morfit was named to the board of Salesforce after the company came under pressure from other activist investors, including Elliott Investment Management.