- Company to invest 15% directly into wind, solar, hydropower
- Focus of financing is Europe, especially Scandinavia, Germany
Aquila Capital, an investor in clean-energy projects, plans to raise 500 million euros ($543 million) to spend on infrastructure.
Aquila will invest about 15 percent of the money directly into wind and solar energy and hydropower, Christian Brezina, head of fund investments in private equity and infrastructure, said by phone. It will invest about 70 percent in diversified funds that typically have 5 to 15 percent in renewables.
As low interest rates in developed markets persist, renewable energy is gathering more investors who see it as a safe and lucrative bet. Power projects are able to deliver a steady cash yield as they generate predictable flows of electricity with proven technology such as solar panels and wind turbines for a fixed number of years.
Aquila’s strategy will focus on countries in the Organization for Economic Cooperation and Development. At least 50 percent of investment will go to Europe, particularly the Nordic countries, where it has “strong ties” with utilities, and its home nation of Germany. The Hamburg-based fund will also finance other infrastructure such as bridges, toll roads and tunnels.
“With the current market environment, with the interest rates that low, everyone’s looking for alternative cash flows,” Brezina said.
Aquila is targeting small pension funds and insurance companies as well as family offices and high-net-worth individuals. Minimum investments will range from 200,000 euros for individuals to 5 million euros for institutional investors.
“Our clients were flying under the radar of the largest funds of funds that often have ticket sizes of 10 million euros,” Brezina said. The strategy was largely client-driven with interest in Germany, Austria and Switzerland, he said.
Aquila expects to deliver a cash yield of 4 to 5 percent and an internal rate of return of 7 percent, excluding fees. It expects to raise 100 million euros by the end of 2016 and 500 million euros in three to five years. It has invested about 3 billion euros in renewables to date, out of 7.1 billion euros of assets under management.