Monday, September 16, 2024

The Pipeline: HMC preps renewables fund, EnCap and Arjun close funds, Vision Ridge’s Europe head

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First look

HMC primes energy fund

HMC Capital, the Australia-listed asset manager best known for its investments in private equity and real estate, last week announced the latest developments in its quest to become a major player in the energy transition, appointing former Australian prime minister Julia Gillard as chair of the firm’s upcoming Energy Transition Fund – alongside a reveal that fundraising for the vehicle will commence in H2 2024 with a target of up to A$2 billion ($1.3 billion; €1.2 billion).

HMC has also appointed four investment professionals to oversee the fund, led by former QIC partner Angela Karl. The vehicle aims to build a portfolio of 15GW “across the energy value chain” in Australia. HMC itself is led by managing director and CEO David Di Pilla.

In a statement, Gillard said: “HMC’s investment management capabilities will position the fund to be a genuine driver of Australia’s transition to zero net carbon by 2050.”

Full of first-time ambition, then.

EnCap falls short with $1.5bn haul

Staying with energy transition funds, Texas-based EnCap Investments closed its EnCap Energy Transition Fund II on $1.5 billion, falling short of its $2 billion target and $2.5 billion hard-cap.

The 2022-vintage vehicle has committed to five investments to date, namely Linea Energy, Parliament Solar, PowerTransitions, Arbor Renewable Gas and Bildmore Renewables, expending about 65 percent of the fund’s capital, a spokesperson told The Pipeline.

As for the missed target, the spokesperson added: “The first three quarters of 2023 saw a significant downward shift in infrastructure fundraising with recovery beginning in late 2023 that was largely dominated by a handful of mega-funds. The team decided to end the fundraise rather than pursue an extension. The team is very pleased to close on $1.5bn for EETF II, which is an uplift from the $1.2 billion raised for EETF I and provides them enough capital to execute their strategy.”

EETF II will be hoping to replicate the success of EETF I in another way, with that fund generating a net IRR of 26 percent as at the end of June last year, according to the Arkansas Teacher Retirement System.

Not bad going for a 13-15 percent net target.

Arjun closes second flagship undersubscribed

EnCap was not alone in missed targets. Arjun Infrastructure Partners’ 2022-vintage Infrastructure Alliance Europe 2 has had a final close of €1.1 billion against a €1.5 billion target. Although the fund fell short of its target, it will have a further €300 million at its disposal from Arjun’s co-investment programme. The deadline for the final close had been extended to the end of Q1.

The predecessor fund closed on €1 billion in March 2021, and in November expectations were for a coming third fund to target €2.5 billion.

According to a statement, Fund II saw reups from European institutional investors as well as “substantial investor interest in both fund and co-investment opportunities” from North America.

Arjun has €5.7 billion of assets under management and the Article 8 fund has a strategy of diversified core and core-plus European assets. The company was an early investor in biogas and has recently invested alongside Macquarie Capital and Abrdn in a large Spanish fibre-to-the-home network.

In September, Bloomberg reported that the London-based company, founded and headed by Surinder Toor, was exploring its options for a potential sale. At least there’s more AUM under the belt to add to the pitch.

Brookfield eyes $3bn renewables exits

Concerns were raised this month – not for the first time – by Macquarie Asset Management that a weaker environment for exits for its green investments were reducing earnings, although there were no such complaints from Brookfield Renewable Partners on its recent Q1 2024 earnings call.

Indeed, the unit said it is expecting $3 billion of proceeds from asset sales this year, and Connor Teskey, chief executive of the renewables unit and president of Brookfield Asset Management, told analysts “we feel very good about that number”, adding: “We started the year by launching a few fairly meaningful sales processes that at this point are well advanced and are seeing strong traction.”

Additionally, when asked if the market is better for buying or selling, Teskey said that “more so than probably any point in recent history, we would say right now the market is heavily, heavily bifurcated”.

File under “bullish”, then.

Grapevine

“The findings are clear and based on facts and data, not ideology or wishful thinking. Gas is needed out to 2050 and beyond, but its role is changing”

Writing for the AFR, Australia’s Resources Minister Madeleine King sets out the country’s position on gas’s role in the energy mix

Who’s hiring

Vision Ridge looks to Macquarie for Europe head

Colorado-based Vision Ridge has hired Ramzi Moubarak to be managing director and head of Europe.

Formerly a managing director in Macquarie Capital’s European infrastructure and energy capital team, Moubarak will remain in London where Vision Ridge opened an office in October.

At Macquarie Capital, Moubarak led the value-add infrastructure investing business and co-led the European energy transition sector. Prior to Macquarie, Moubarak was at European private equity firm Montagu and at Morgan Stanley Infrastructure Partners.

“I expect that his breadth of infrastructure investment experience will be a great asset to our London team as we evaluate attractive opportunities to add to our portfolio,” said Reuben Munger, managing partner and CIO of Vision Ridge, in a statement.

Moubarak’s brief includes sourcing and executing mostly European investments across the energy, transportation and agriculture sectors. Vision Ridge targets sustainability-focused assets and is in market with its fourth fund, targeting $2.5 billion.

LP watch

CDPQ in $400m partnership with Swiss LPs

Nine Swiss institutional investors have formed a consortium with the aim of co-investing in infrastructure alongside Canadian pension CDPQ. The consortium has agreed to commit $400 million initially, “which will grow over time… from these initial members and from new members”, a spokesman for InPact Partners, a Swiss investment advisory firm that is serving as adviser to the consortium, told The Pipeline.

The consortium – which at the moment comprises French-speaking Swiss LPs, including Retraites Populaires, the Pension Fund of the State of Geneva, the State of Friborg Provident Fund, the State Pension Fund of Vaud and the pension fund of the International Committee of the Red Cross – is “already in advanced talks with pension funds and insurance companies in the German and Italian-speaking regions [of Switzerland]”, the spokesman said.

“The focus of the investment plan is global across developed markets,” the spokesman added, but which infrastructure subsectors will be targeted have not yet been specified. However, they will have a strong ESG focus “in all instances”, the spokesman emphasised.

Deals

Car rental sign

Meridiam’s airport Reno-vation

Meridiam and its subsidiary Conrac Solutions have partnered with the Reno-Tahoe Airport Authority to launch a $299 million ground transportation centre at Reno-Tahoe International Airport in Nevada.

The privately financed project is the first major collaboration between the firms since Meridiam acquired Conrac Solutions in May 2023.

The new facility will include a consolidated rent-a-car centre and aims to boost sustainability as part of the airport’s MoreRNO Infrastructure Programme, with features including energy efficiency measures and electric vehicle readiness, along with improved pedestrian access and expanded parking.

The project adds to Conrac’s existing portfolio of 17 rent-a-car facilities across the US.

Meridiam also has a growing list of airport assets, including the redevelopment of LaGuardia Airport’s Terminal B in New York City, which achieved a five-star rating from airport consultancy Skytrax in 2023 – the first terminal in North America to do so.

This time, though, with car rentals, Meridiam is staying grounded.


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