Ardian has launched its first open-end infrastructure fund with a focus on the energy transition, an Article 9 vehicle under the EU’s Sustainable Finance Disclosure Regulation that is targeting an initial €1 billion.
AXA Group is Ardian Clean Energy Evergreen Fund’s cornerstone investor, providing it with a 1GW seed portfolio of 12 wind and solar assets spread across Europe and the Americas, which Ardian had acquired and was managing on its behalf. That means the new vehicle starts life already more than 50 percent invested, as it looks to deploy capital in “mature renewable technologies” like solar and wind, as well as hydro, biogas, biomass, storage and energy efficiency, Ardian stated. The fund is targeting individual investments of up to €150 million.
“We started this energy-transition vision with renewables [investing] back in 2007, so almost from the very beginning,” Mathias Burghardt, Ardian’s head of infrastructure, told Infrastructure Investor. “At a certain point, we realised, particularly in Europe, that cost of capital is extremely competitive, meaning you need to have a structure that basically relies on operational excellence.
“To do that, you need engineers and data scientists on your team, not just investment professionals. But to retain those people, to be able to develop and continue to enhance our digital tools, like Opta [Ardian’s in-house renewables digital platform], you need to be long term – otherwise, you are not able to retain people if you’re planning to sell in five years’ time,” Burghardt said, pointing out part of the reason why the manager decided to structure ACEEF as an open-end fund.
The other part of the equation was AXA’s willingness to hold on to its assets for the long term, coupled with the recognition the fund would be stronger with access to third-party capital.
While the vehicle is targeting an initial €1 billion, Burghardt said it plans to raise more once that initial capital deployed. In addition to Europe and the Americas, where the fund will predominantly invest, he said the team will consider Asia “on a selective basis”.
ACEEF will have a strong exposure to contracted assets while taking a portion of merchant risk across its investments. “We believe in the energy transition, which implies we are convinced that energy will cost more in the future – that people will have to pay the price for independent and clean energy,” Burghardt said. “So having some exposure to the market is a natural thing to have. And having the ability to analyse merchant exposure and take a view on what should be the right exposure to the market is part of our business.”
In addition to ACEEF, Ardian is in the market with its Clean H2 Infra Fund, billed as the world’s largest clean hydrogen investment platform. The fund, also Article 9 compliant, is managed by Hy24, a joint venture between Paris-based fund manager Ardian and FiveT Hydrogen, a clean hydrogen investment platform. It recently secured a €100 million commitment from the Japan Bank for International Cooperation, matching an earlier investment received from Caisse Centrale de Réassurance, a French state-backed reinsurer. A final close on its €1.8 billion hard-cap is expected by mid-2022.
Ardian currently manages more than 7.6GW of heat and renewable energy capacity in Europe and the Americas across all its funds. In a statement, the manager said it will boost its team with the hire “of a new managing director from the renewables industry, who will be dedicated to the clean energy platform” and due to arrive in the coming months.