SCOTLAND'S largest independent small-scale hydro scheme developer has been acquired by an infrastructure investor in a deal thought to be worth millions of pounds.

While Green Highland Renewables was staying tight lipped on the value of the transaction with London-based Ancala Partners the takeover comes less than three years after a majority stake was acquired in the business for £3.3 million.

The investors at that time, the Environmental Energies Fund run by Scottish Equity Partners and the publicly funded Scottish Investment Bank, have sold out to Ancala as have Green Highland Renewables founders Alastair Riddell and Iain Wotherspoon, who held minority stakes.

The Perth company said the agreement with Ancala gives it significant capital to identify more development sites while the possibility of acquiring existing operational hydro is also being considered.

Richard Round, chief executive of Green Highland Renewables, described the takeover as good for the "small-scale hydro sector in general".

Mr Round, formerly with the likes of Aquamarine Power, Novera Energy and Scottish Coal, added: "Well constructed and financed hydro schemes offer stable long term returns and this is clearly attractive to institutional investors.

"Ancala Partners has given us a strategic mandate to secure further development opportunities in order to grow our operational asset base.

"Their backing will enable us to build on our portfolio both organically and through acquisition."

Green Highland Renewables, which employs about 20 people, will keep its name with all staff being retained.

The business, formed in 2007, has its own hydro assets which are located across the Highlands and have a generating capacity of 4.2 megawatts.

It also has a consultancy arm which specialises in the planning, consent and construction for small hydro schemes which typically range from 100 kilowatts to two megawatts.

It boasts of a 100 per cent success rate in the projects it has taken on.

Small hydro schemes generally divert part of the flow in fast-moving streams and rivers without a need for dams and aqueducts.

One of its most recent developments was a 465kw scheme on the Abhainn Shalachain river on the Morvern peninsula in Argyllshire which went live in January.

It is also involved in developed three linked scheme on the north shore of Loch Arkaig, near Achnacarry in the Highlands, which could generate up to 2.5MW.

At the moment its development pipeline has a generating capacity of almost 22MW.

SSE was an early investor in Green Highland Renewables, acquiring a 33.3 per cent stake for £750,000 in 2008.

The SSE Ventures arm then transferred nine of its portfolio companies, including Green Highland Renewables, to SEP in 2012 for an undisclosed sum while also investing £95m in the Environmental Energies Fund.

Ancala Partners used an infrastructure vehicle it manages, called Ancala Renewables, to complete the deal.

It is believed to be the first time Ancala Partners, which was formed in 2010 to help identify infrastructure deals in the UK and Europe for institutional investors, has put backing into hydro power.

The combination of proven technology, long asset life and steady long-term returns are understood to be among the factors which Ancala Partners was attracted by.

Abbreviated accounts at Companies House for Green Highland Renewables in the year to September 30, 2014, show a retained profit of around £108,000.

The balance sheet notes net assets worth more than £2.4m.