A new renewable energy investment vehicle targeting smaller-scale wind and solar projects has launched in Australia, backed by UK-based infrastructure and private equity investment manager, Foresight Group.
Foresight said this week that the $150 million Foresight Renewable Energy Income Fund would make loans of $5-$30 million, predominantly to smaller-scale projects located in Australia.
The fund aims is to provide investors with a yield of between 4-4.5 per cent over the Reserve Bank cash rate, and access to Climate Bonds Initiative certified green debt – an asset class usually only available to institutional investors.
On the renewables side of the equation, the wholesale fund aims to fill a gap for smaller-scale solar and wind developers looking for project finance.
“Historically, the big banks have overlooked smaller-ticket wind and solar projects, as they are generalists and lack the dedicated resources to identify and assess small-scale projects,” said Kim Nguyen, head of Australia at Foresight.
“This presents a significant opportunity for us as infrastructure investment specialists. With a proven 35-year investment track record, Foresight has the experience and the sector knowledge to best capture these opportunities in the interest of Australian investors.”
The fund is Foresight’s first wholesale effort in Australia – although as a manager of funds on behalf of institutions, it oversees investments of more than 250MW of Australian solar projects.
These include the Bannerton Solar Park, one of the biggest PV projects yet completed in Victoria, with its output contracted to help power Melbourne’s tram network.
Nigel Aitchison, Foresight’s head of infrastructure said the investor market for green bonds and renewable energy infrastructure was expected to continue to intensify.
Aitchison said the fund’s approach to investment – where each loan will be individually tailored to meet a Sustainability Framework certified by the Climate Bonds Initiative and verified by the Carbon Trust – would especially appeal in the current market.
“Investors have shifted their focus to true-to-label investment solutions that directly contribute to the global decarbonisation agenda,” he said in a statement.
“The Foresight Renewable Energy Income Fund fits this bill. …We believe this sets the new gold standard for green debt funding in Australia.”