BlackRock has raised €275m in a first close for its European renewables fund.
The Renewable Income Europe vehicle was backed by institutional investors from Europe and Asia.
The vehicle, which has a 20-year buy-and-hold strategy, will target long-term inflation-linked income.
Rory O’Connor, head of European investment for BlackRock Renewables and manager of the fund, said: “Renewable energy has become a mainstream asset class within infrastructure.
“Demand for renewables in developed countries is being driven by the need to replace an ageing power-generation fleet, improvements in cost competitiveness and concerns about climate change.
“For investors, the sector can provide opportunities for less correlated, inflation-linked, long-duration income and attractive risk-adjusted returns.”
Investments will be made on an unlevered basis and focus on projects across wind and solar-photovoltaic systems.
BlackRock said the fund’s investment team would look for investments on a pan-European basis, with the majority of opportunities in Western Europe.
Results of a poll of 174 of BlackRock’s largest clients, representing $6.6trn, suggest a shift away from traditional asset classes and passive investments that have been at the core of many portfolios.
The company said European investors showed bullishness towards certain alternative asset classes, with 60% intending to increase exposure to real assets.
Peter Nielsen, head of Continental European institutional business at BlackRock, said that, in a volatile market environment with consistently low yields, “institutional investors are struggling to generate sufficient returns to meet their liabilities”.
“Real asset investments,” he said, “like renewable power, are ideally suited to institutions that have a long time horizon and are looking income-producing assets with inflation-protection and low correlations.”
BlackRock recently announced it was creating a real assets group as part of a wider reorganisation, with the move taking effect this month.
The new real assets group will be headed by Jim Barry.
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