Allianz Global Investors has begun to set up a new investment team in the US to capitalise on renewables opportunities, particularly demand for earlier stage capital, chief investment officer Armin Sandhoevel told Infrastructure Investor.
A concentrated European wind and solar market has pushed AllianzGI to expand its deal sourcing capability across the Atlantic, and Sandhoevel, responsible for Allianz GI’s equity business, relocated to New York in December.
“Fifteen years ago, we had to do a lot of work to convince investors and educate the market and now it’s an [established] trend and a mature technology,” he explained. “That means every investor is looking more or less for the same assets and it brings the returns down. As an asset manager, you have to look at a strategy with a more attractive risk-return profile.”
Similar to Europe a couple of years ago, AllianzGI expects that the American market will experience significant growth in the onshore wind and solar market. The latter is expected to trigger significant capital demand, especially for the earlier stages in the project life cycle. In addition to wind and solar, AllianzGI believes the ongoing energy transition will also bring relatively new technologies and sub-sectors into focus. With that in mind, Sandhoevel sees potential for investments in storage facilities and transmission stations in the short to mediun-term.
In addition to the US, the CIO has other countries in the region on his radar and is closely following developments in Canada and some select markets in Latin America, such as Mexico and Chile.
AllianzGI also expects to invest in clean technology projects in the medium term, targeting less mature sectors such as smaller grids, energy efficiency and energy storage.
An earlier version of this story inadvertently contained details that were not ready for publication.