Aquila launches new JV to target S Korean renewables

The firm’s decision to partner with South Korean company TopInfra to form new venture Aquila Development Partners marks a change in Aquila’s usual APAC approach.

German asset manager Aquila Capital is continuing its expansion in the Asia-Pacific with the launch of incorporated joint venture Aquila Development Partners, which will focus on renewable projects in South Korea.

Aquila’s Asia-Pacific chief executive Alexander Lenz told Infrastructure Investor the new venture – which was formed in partnership with South Korean renewable asset development company Topinfra – would develop solar, wind and battery storage systems in the country. Lenz declined to comment on the size of the firm’s investment and the capital split of the venture. He did, however, say Aquila will finance these projects through different existing funding sources while Topinfra will use its own funding sources.

Topinfra brings with it a proprietary pipeline of 1GW of wind power and 430MW of solar projects, which the joint venture will continue to work on while seeking additional opportunities in the market.

“The Korean market has not had a breakthrough when it comes to the massive deployment of utility-scale solar and wind plants so we are talking about an early-stage pipeline, but this is one of the things that we feel very comfortable with, taking early-stage development risk,” Lenz said.

“This is what separates us from [some] competitors that are in the same range of assets under management. We have all the in-house expertise, both on the development side as well as on the technical side, to understand and manage the development of technical risks, and we feel comfortable doing so.”

The firm, which was founded in 2001, expanded its Singapore office in October 2020 to create a new regional hub and increase its focus on the Asia-Pacific region. The expansion followed Daiwa Energy & Infrastructure, a wholly-owned subsidiary of Japanese conglomerate Daiwa Securities Group, taking a 40 percent stake in Aquila in December 2019.

According to Lenz, the decision to form a new company in partnership with a local developer in order to enter the South Korean renewables market was different to the firm’s usual approach when weighing up opportunities in the region.

“What we typically do in markets that are relatively easy to approach is that we would partner with developers, we would sign framework agreements with those developers and we would buy pipelines off those developers… [We would] basically develop the pipelines further, [injecting] capital and our technical competence,” he said.

“In Korea’s example, we studied the market and we realised that the market is pretty much a closed shop for foreign companies so far. We haven’t seen a lot of traction by foreign investors or developers in the market. It has similar market characteristics to Japan and [can be] challenging from a cultural barrier point of view.

“[Upon doing research into potential partners] we were convinced of Topinfra’s credentials and their experience in the market. Importantly, we realised we share the same vision and – even more importantly – they saw a ‘value-add’ in partnering with a foreign player. We decided to set up a development company together to really combine the strength of both sides.”