HIH Invest Real Estate has expanded its fund portfolio with the addition of the HIH green energy invest fund.
Set up under Luxembourg law, the vehicle represent's the firm's first Article-9 fund. The open-ended institutional vehicle has also acquired its first asset, and is targeting a total size of €750 mln.
HIH Green Energy Invest pursues long-term investments in photovoltaics and onshore wind power projects. It focuses on existing installations and projects prepared for development and already approved for the construction and operation of power plants.
Up to 10% of the projected fund assets are earmarked for investments in property developments for whose construction and operation certain permits have yet to be approved. The fund seeks to invest mainly in assets worth between €20 and €120 mln.
The fund's primary target countries are Germany, France, Italy, and Spain. However, it will also consider investments in the Benelux countries, the UK, Ireland, Poland, Portugal, and the Nordics. The fund term of 30 years correlates with the projected service life of the installations, which is over 30 years.
Alexander Eggert, managing director of HIH Invest, said: 'For HIH Invest, the new fund is a premiere in more ways than one. For the first time, we are venturing outside the classic real estate sector and entering a new asset class that, while having a lot in common with it, differs in many ways from our accustomed business.
'We have pushed forward with the diversification of our product line-up over the past few years, and are opening up new growth areas. This gives us an even broader range of options to meet our clients’ needs.'
The firm predicts that net cash-on-cash returns will average 5.5%. 'What makes this a reasonable target are not least the perfectly predictable revenues: Solar irradiation and wind force can be reliably forecast, power purchase agreements have long terms, and the demand for electricity is growing,' said Kristof Krull, head of infrastructure at HIH Invest.
The first asset for the fund is the Grande Lande wind farm in the Pays de la Loire region in north-west France. It consists of six facilities equipped with wind turbines of the Vestas brand, and has a combined output of 13.2 MW.
The asset was sold by BayWa r.e. France, which is the BayWa r.e. subsidiary that developed and constructed the wind farm, amd which will operate it on behalf of HIH.
André Rolff, head of transaction management infrastructure said: 'The wind farm will generate attractive feed-in revenues via a government-guaranteed feed-in tariff that is valid for an operating period of 20 years and is inflation-indexed, too. This enables us to secure stable long-term earnings for the HIH Green Energy Invest fund.'
Once the government-guaranteed feed-in tariffs expire, the electricity can be marketed on the open electricity market or by signing a power purchase agreement. The land is secured for up to 40 years, and thus far longer than the lifetime of green energy invest.
The tax due diligence was performed by KPMG. The legal due diligence was carried out by the law firm of klein wenner in Paris. RINA Consulting, based in Saint Germain en Laye, was responsible for the technical due diligence.
The insurance due diligence was done by Gossler, Gobert & Wolters Assekuranz-Makler, a Hamburg-based assurance broker. Dutthileul & Associés from Paris conducted the financial due diligence.
