Investment manager KGAL has raised €260m from institutional investors for its pan-European renewable-energy fund ESPF 5.
The vehicle is an Article 9 impact fund under the EU’s sustainable finance disclosure regulation (SFDR), which is required to have sustainable investment as its objective and must provide information on how those objectives are achieved.
European insurance companies, pension funds, impact-investment managers and family offices have committed the capital.
KGAL is looking to raise €500m in total and expects to invest almost 20% of the capital committed so far by the end of the year.
About two-thirds of the capital came from existing investors in the fund series. The previous fund, raised €750m in 2019.
“The impact status of ESPF 5 is a real game changer,” said Christian Schulte Eistrup, head of KGAL’s international institutional business.
“We are seeing a great deal of interest from institutional investors who already want to meet the highest ESG requirements of the SFDR with their investments – in contrast, the number of corresponding products is still very limited.”
ESPF 5 invests primarily in wind and solar power across Europe with a build-and-sell strategy. Other renewable-energy generation, storage technologies and grid infrastructure can also be considered.
KGAL said the fund had a large, broadly diversified transaction pipeline that would eventually draw all of the current equity commitments.
The fund’s first investment was a late-stage photovoltaic solar project in Sicily with a planned installed capacity of more than 100 megawatts.
“In addition, we are in negotiations for large-scale collaborations with renewable-energy developers in Germany and Spain,” said portfolio manager Carsten Haubner.
“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 7-9% target-return range.”
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