BlackRock hits $1bn first close on latest renewables fund – exclusive

Global Renewable Power III, which has so far garnered funds mostly from Europe, will begin deployment next year.

BlackRock Real Assets has reached a $1 billion first close on the third vintage of its Global Renewable Power fund series.

The Global Renewable Power III fund, which the group launched in the first quarter of this year, has a $2.5 billion target and follows on from the 2017 closing of Global Renewable Power II on $1.6 billion.

David Giordano, global head of BlackRock Renewable Power, told Infrastructure Investor the strategy broadly remains the same, though the scope of opportunity has been widened.

“We’ve highlighted the expanding scope of renewable power and the infrastructure required for the energy transition,” he said. “Our focus is on renewable power generation assets and we have explicitly laid out the inclusion of distributed generation and battery storage as part of the discussion as well. It’s the assets that will be part of the broader energy transition.”

BlackRock has already made similar moves, teaming up with GE to build a distributed solar and storage company in July. That deal was part of GRP II – the successor fund has yet to make its first investment. Giordano said it will begin deploying in the first half of next year and expects the Asia-Pacific region to account for around 30-40 percent of its investments.

“We’ve been 55:45 percent wind and solar and I would anticipate a similar kind of mix,” Giordano added. “We also believe anywhere between 10-20 percent of the fund will be things like battery storage or community solar assets and the distribution networks that are part of that.”

GRP III is targeting a gross IRR of 12-13 percent and a gross yield of 5-7 percent, according to documents from the UK-based Lewisham Borough Council Pension Fund. The pension is not one of BlackRock’s initial investors, though Giordano said about 80 percent of the first close has come from European investors, which he attributed to “some good early momentum”.

Known investors in the fund include the Minnesota State Board of Investment ($100 million) and the London Borough of Southwark Pension Fund, which invested £35 million ($45.4 million, €41 million).

BlackRock has been divesting assets from its previous GRP funds in recent months. In September, it offloaded its interest in the 42MW Elk and 37.5MW Bethel wind farms in Iowa to US investor Greenbacker, a month after the pair had agreed a deal on an additional US wind project.