German investment firm Aquila Capital is close to sealing a €175 million second close on its landmark hydropower fund by the end of the year, managing director Oldrik Verloop told Infrastructure Investor.
Aquila has raised about €125 million and expects to add a further €50 million to the fund by the end of Q4. The fund is looking to raise between €250 million and €300 million in total, with co-investments held by APG. It has a targeted net IRR of 7 percent, a fee structure of below 1 percent and has so far garnered investments from European pension funds and insurance companies.
The firm also expects imminently to add a further six small-scale hydropower plants in Norway following a deal with one of the country’s larger utilities. The move comes after Aquila last week closed the merger of Norwegian hydropower operators Smakraft and Norsk Gronnkraft, providing the investor with a portfolio of about 1TWh annual production capacity across 100 plants in Norway and Turkey.
Aquila also hopes to add a further 20 plants to the platform every year over the next five years, with typical deal sizes below enterprise values of €25 million. Several of Aquila’s opportunities in the fund have come through Norwegian utilities divesting smaller hydropower plants in favour of owning larger projects.
The fund is Europe’s first dedicated hydropower fund and was launched in May 2015. Aquila began investing in hydropower in 2009 and it also manages a large portfolio of wind and solar assets, including in Japan where last week it opened an office in Tokyo.