German independent asset manager Prime Capital AG has launched the fundraising for Prime Green Energy Infrastructure Fund, which will invest in wind powered energy assets in the Nordics.
The fund, which is currently being set up, will offer investors attractive investment opportunities in a constantly evolving market place, with no reliance on government support. The fund will secure assets in their late development stage and exploit their full return potential, by being actively involved in their “commercialisation”. This is understood as the process of optimising the layouts, contracts, and financial structures of already permitted projects.
In order to achieve economies of scale and deploy capital effectively, the fund will focus solely on large-scale projects. Prime Capital has already secured the first three seed investments for the Fund. Based in Norway and Sweden, the permitted projects total over 600MW of capacity.
The fund envisages having a non-exclusive collaboration agreement in the Nordic countries between Prime Capital and Siemens Gamesa Renewable Energy (SGRE), a market leader within the wind industry. The collaboration was successfully tested in recent transactions – including project Nordlys, Norway’s second largest onshore wind project to date. Comprising of circa 280MW, it will be commissioned in 2019. Siemens Financial Services co-invested in the project along with a German pension fund.
“The Fund’s approach to the market is from our point of view a very innovative way, allowing institutional investors to achieve attractive returns in a competitive market”, says Andreas Kalusche, Vorstand, Head of Client Solutions. “We believe investors can achieve above market returns by securing projects in the late development stages, which enables fund managers to bring in their expertise in optimising and commercialising the assets. The value-add of asset managers in reducing the financing, investment and operating costs of assets, leading to a lower achieved levelised-cost-of-energy (LCOE) will be crucial, as the currently wide-spread strategy of acquiring turn-key projects offers ever diminishing returns. Given the unique setup, we feel well positioned to offer investors this value-add approach.”
Prime Capital’s experienced team has acquired wind, solar and hydro assets across Europe totalling circa 600MW, or circa EUR900 million in enterprise value. Seventy five per cent of Prime Capital’s track record is in Greenfield projects and 60 per cent in the Nordics.
The fund targets a net return of over 8 per cent and has a term of eight years, subject to two potential one-year extensions. The Fund aims to raise over 500 million Euros, and make between seven and 12 investments. It is currently in advanced discussions with seed investors for its First Closing.
An investment in the Fund is reserved for professional investors within the meaning of section 1 (19) nos. 32 of the Kapitalanlagegesetzbuch (KAGB). The Fund may not be distributed to retail investors within the meaning of section 1 (19) no. 31 of the KAGB.