Institutional investors are backing sustainability: KGAL, the independent investment and asset manager, announced yesterday that its Impact Fund ESPF 5 has hit first close at over 50% of its total equity target.
The pan-European renewable energy fund has already secured over €260 million of equity and almost 20% of the committed capital is to be invested before the end of this year.
KGAL said that insurance companies, pension funds, impact investment managers and family offices from across Europe have contributed to the successful launch of ESPF 5 renewable energy impact fund. Existing clients represent two thirds of the first closing with the rest of the capital coming from new clients.
“The pioneering role of KGAL in terms of impact is one of the reasons for the positive response from the market”, said Christian Schulte Eistrup, Head of International Institutional Business, KGAL. “The impact status of ESPF 5 is a real game changer: we are seeing a great deal of interest from institutional investors who already want to meet the highest ESG requirements, while the number of corresponding products is still very limited”.
The Impact fund is also notable for its large and broadly diversified transaction pipeline that, once successfully implemented, will draw all of the current equity commitments.
The first investment is a late-stage PV solar project development in Sicily with a planned installed capacity of over 100 MW. KGAL is also in negotiations for large-scale collaborations with renewable energy developers in Germany and Spain.
“With the acquisitions planned to date, we will achieve broad diversification of the portfolio and we expect all of these investments to reach the upper end of the 7 to 9% target return range”, said Carsten Haubner, portfolio manager, KGAL. “Returns and impact can be in harmony, and investors are becoming increasingly aware of this”.
The new core-plus fund ESPF 5 focuses primarily on an active build and sell strategy. The portfolio management team invests in wind power and photovoltaics across Europe but may add other renewable energy generation and storage technologies as well as grid infrastructure in future.
Since 2003 KGAL has invested in over 150 renewable energy plants in nine European countries, with a total capacity of over 1.5 GW.