Nick Rains, TLT

A particular highlight of the last two years for TLT‘s Energy and Infrastructure team was working with long term client Ecotricity on its sale of the Electric Highway to GRIDSERVE.

Ecotricity launched the Electric Highway in 2011 for early advocates of electric vehicle (EV) transport, the first and largest of its kind. This pioneering nationwide network of charging stations laid the groundwork for the revolutionary switch to electric, planned for nine years’ time.

The 2030 switch to EV is a vital pillar in the UK government’s ‘Green Industrial Revolution’ and will be supported by a £1.3bn investment in EV charging points and EV grants for buyers totalling £582m.

TLT’s team was led by Kay Hobbs, advising Ecotricity on all aspects of preparing the Electric Highway for sale since early 2020. This meant the firm was able to act swiftly when the transaction commenced in February 2021. GRIDSERVE’s initial acquisition of 25% of the Electric Highway was completed in March 2021 and the remainder was secured in June 2021.

With 100% ownership of the Electric Highway, GRIDSERVE plans to replace all existing charging stations in the network with new technology such as contactless payments, ultra-rapid charging points (increasing capacity from 7kW to 350 kW) and Tesla Superchargers. These improvements are hoped to inspire a new level of confidence in EV motorists throughout the UK because of the network’s sheer size and vastly improved efficiency and accessibility.

The two-tranche structure of the deal and swift turnaround between initial instruction and execution meant that Hobbs had to assemble a bespoke, multi-talented, cross-disciplinary team extremely rapidly, including corporate associate Nick Rains.

Rains joined TLT five years ago, in May 2016, qualifying at the firm in 2017. A corporate lawyer, specialising in the clean energy sector, he has acted for developers, investment funds, financial institutions, utility companies, and local authorities in relation to all stages of the project lifecycle across a spectrum of technologies including onshore wind, biomass, solar and energy storage.

In total, Rains has advised in relation to over 2GW of renewable energy projects and has been commended by clients for his efficiency and commercial understanding in dealing with complex transactional issues. He was shortlisted for the Legal Expert award at the CILEx National Awards 2018 for his work on clean energy transactions.

“I’m very fortunate to be in one of the most active M&A teams in the clean energy sector globally, meaning I’ve had fantastic exposure to a massive range of deals,” Rains says. “When I think about how my career has developed to date, the first transaction which was a real milestone for me was advising InfraRed Capital on the disposal of Twin Rivers, a 29MW wind project, to NTR in December 2016. That was the first transaction where I felt fully involved as someone who knew what they were doing in the sector, as opposed to just helping out the associate and partner above me.

“I continued to develop my expertise in the sector, and a relationship with NextEnergy was particularly influential in my development, wherein I advised them on 10 solar transactions over the course of just four months from late 2017 to early 2018, which I enjoyed greatly and gave me significant responsibility in progressing and advising on transactions, as well as having supervision the trainee’s work. In 2017 I also advised on what may still be the largest solar transaction in the UK, whereby Rockfire Capital acquired over 300MW of solar projects from Magnetar, which was a blockbuster transaction with a variety of challenging complexities. In addition, in 2019 I advised Macquarie on their first BioGas transaction, with their investment into BioCow.”

Prior to the Ecotricity transaction Rains says he had some understanding of what made EV chargepoint businesses tick, but the deal enabled him to “really get under the hood of a network” and understand the commercial and value drivers.

The Ecotricity-GRIDSERVE deal

TLT tackled various inherent challenges in pushing this deal through. First, the pre-existing challenges of this complex deal were compounded by its structure. Originally envisioned as a single transaction, it quickly became apparent that a rapid restructure to a two-tranche plan was necessary. TLT had the technical and human resources to design this new alternative structure but deploying it required resilience and diligence.

All of the paperwork for the second tranche of the deal (leading to GRIDSERVE’s complete ownership of the Electric Highway) had to be in place prior to the completion of the first tranche in March 2021. This was no mean feat considering that it involved third parties like Hitachi, who provided GRIDSERVE’s funding, as well as the two main stakeholders.

With Hobbs at the helm and prior preparation under the team’s belts, they actioned the first tranche of the deal in February 2021 and it was completed in March 2021. Completing this component of the deal within an aggressive timescale was a critical success factor and, in practical terms, meant the team working a month of long days, evenings and weekends to achieve the desired result.

“The transaction had to meet a strict timeline for a number of commercial reasons. On top of this the transaction was split into two stages – during the first stage Gridserve acquired 25% of the target, which meant a full suite of acquisition and joint venture documents needed to be prepared. Then Gridserve acquired the remaining 75% of the shares in the target, which meant we had to ensure that the transitional arrangements and issues such as the passing of IP rights and transferring of employees all tied together,” says Rains.

“The most interesting aspect on that front was in relation to the bid process and the considerations and priorities different bidders gave to different aspects of the network. As the bidders included a number of key players across both the clean energy and the oil and gas sectors, it was fascinating to see the outlook of each of these entities and I learned a significant amount about what each party considers important behind the scenes, which, is the key in unlocking investment.”

This two-tranche structure engendered a transitional phase wherein TLT was required to support both parties in several unforeseen ways to help them reach their mutual goal. For instance, new interim shareholder arrangements were necessitated because, at that point, Electric Highway had two owners instead of one. Consequently, the firm created a raft of novel workstreams and commercial agreements to support new arrangements for EV charging infrastructure construction contracts and back-office systems Furthermore, the firm’s IP experts ensured the transfer of IP to the company, including The Electric Highway App. TLT’s employment experts arranged the provision of key personnel, and there were tax and capitalisation issues to untangle with GRIDSERVE coming on board, such as Ecotricity shareholder loans.

Finally, working to demanding deadlines with multiple workstreams was further compounded by the need to align the processes and procedures with those of vital third parties like Hitachi. In doing so the firm’s banking experts negotiated finance documentation which was back-to-back with Hitachi’s funding to GRIDSERVE. As GRIDSERVE’s investor, it fuelled the deal, and TLT was bound by its timescales over in Japan. Employing deft project management, the firm ensured that all the appropriate documentation was in place and international banking requirements satisfied so that the deal’s financing could be fulfilled. With the complexities of the first tranche completed, tranche two was more straightforward, although diligence and precision were essential throughout.

The impact of the deal in terms of improving and upgrading the EV infrastructure was evident even during the transitional phase of the deal. In April 2021, The Electric Highway opened the UK’s largest high-power motorway charging site at MOTO’s new Rugby services at Junction 1 of the M6. The facility boasts 12 cutting-edge, contactless pumps from Tritium, which can charge supported cars at 350 kW and add 100 miles of range in only five minutes.

“What has particularly stuck with me about this deal is its ability to really accelerate the adoption of electric vehicles. There is simply no other infrastructure like it in the UK, and Ecotricity realised that in order for the Electric Highway to fulfil its potential, they needed to sell it to someone who was better placed to invest the money needed to upgrade and maintain the infrastructure”, Rains says.

“Already the effects of this transaction have been dramatic – there are review websites, posts on LinkedIn, and TV reports of people testing EVs over long distances to see if range is an issue. Previously, range anxiety was the big sticking point, however more and more I am seeing people realising the range anxiety need not be such an issue and that these charge points can be relied upon. It is watching this real-world impact unfold before my eyes which makes this deal unique.”

From a personal perspective, Rains believes the transaction will have a significant impact on his career moving forward. “Other than the lawyers on the other side, no-one has carried out a UK transaction in relation to an EV network of this size, so it truly puts me in a very small bracket of lawyers who have this experience,” he explains.

Ecotricity will use funds from the deal to further diversify its eco-centric portfolio in endlessly inventive ways, including innovations like Britain’s first Green Gasmill, which generates natural gas for the grid from grass, and the expansion of its Sky Mining facility, which converts atmospheric carbon dioxide into precious lab-grown Sky Diamonds.