Stockholm (NordSIP) – NextEnergy Capital (NEC) announced the second close of their flagship NextPower III fund (NPIII), its flagship private ESG infrastructure fund on funding, on Monday, January 13. The fund secured approximately US$118 million in investment commitments.
Solar-focused manager NextEnergy Capital counts approximately US$2.3 billion of solar AUM. NPIII is an infrastructure fund focused on funding the construction and long-term ownership of subsidised and new-build solar power plants across international markets.
Following this second close, NPIII has commitments of around US$280 million and for a total fund size of US$750 million with a cap at US$ 1bn. NextPower III’s second close secured commitments from a pool of institutional investors including Elo Mutual Pension Insurance Company (a large Finnish mutual pension insurance company), CCLA (one of the UK’s largest charity fund managers) and a Swedish institutional investor. As we reported in January 2019, during the first close NPIII secured funding from Norway’s KLP, among others. NPIII targets a gross IRR of 13% to 15% by investing in the construction phase of solar projects in OECD countries.
“NPIII has made excellent progress since the first close. The quality of institutional support for the Fund underlines increasing investor interest and support for our climate change-focused investment strategy. In parallel to significantly growing the portfolio of solar projects owned by NPIII, we are looking forward to securing further investor support during the first half of 2020,” said Michael Bonte-Friedheim, Founding Partner and Group CEO of NextEnergy Capital. “NEC surpassed significant milestones in late 2019, including having invested in over 200 individual solar projects with a total installed capacity in excess of 1,000MWp. Our investment vehicles have continued to outperform technically, operationally and financially, generating incremental investor returns and incremental broader environmental benefits.”
Since its first close in November 2018, the Fund has acquired three projects with a total installed capacity of c.150MWp in the USA. During the first quarter of 2020, NPIII is seeking investment opportunities in Europe, Mexico, the USA as well as India.
“There have been few surprises in the fundraising process for NextPower III actually, and the demand for the fund remains very strong. The attractive target returns, combined with its diversifying characteristics against existing wind assets in Nordic investor portfolios appear to be the main drivers behind this,” says Christian Andersson, CEO and Founder of Worthwhile Capital Partners a specialist placement agent that supported NextEnergy Capital.
“There are however a meaningful amount of investors whose investment mandates remain ill-suited for renewable energy investments,” Andersson adds. “These mandates are now rapidly being changed to accommodate funds like NextPower III, particularly since the data on climate change looks increasingly challenging and ambitions to help reducing CO2 emissions grows. We, therefore, anticipate the demand for the fund to continue to increase further in 2020, especially after the successful second close.”
NEC forecasts that NPIII will achieve a portfolio of between 2.5 and 3.0GWp in operating solar projects across its target markets upon full capital deployment.