CIP holds €1.5bn first close on CI IV

Copenhagen Infrastructure Partners has held a first close on €1.5 billion for its fourth flagship fund, which if it reaches its €5.5 billion target, will be the largest renewable energy fund in the world, according to the firm.

“As it looks right now, we’re quite confident that we can get to the target,” CIP partner Steen Lønberg Jørgensen, told Infrastructure Investor.

Investors in Copenhagen Infrastructure IV include Danish pension funds PensionDanmark and AP Pension, as well as Norway’s KLP – all of which have long-standing relationships with CIP and have invested in previous vehicles.

According to a statement, “several other prominent institutional investors are in the process of committing to CI IV” from the Nordics, continental Europe, the UK, Israel, North America, Asia and Australia.

“[The pandemic] has not impacted our fundraising, particularly in terms of established relationships,” Jørgensen said. But some processes involving new investors have taken a little longer than usual due to covid-19.

CI IV, which has a hard-cap of €7 billion, will be a continuation of its three predecessors, and will invest in greenfield renewable energy projects in what CIP terms “low-risk OECD markets” in North America, Western Europe, developed Asia and Australia. It will be diversified across technologies, investing in offshore and onshore wind, solar PV, transmission, storage, waste-to-energy and biomass.

Asked whether he expects covid-19 to help or hinder renewable energy growth, Jørgensen said: “If you look at offshore wind, greenfield projects in that sector tap into regulatory regimes that have been in place many years. Many countries in which we invest adopted new energy policies after the Paris Agreement five years ago and they are not changing their policies due to covid.”

Jørgensen also pointed out that due to the significant drop in power consumption, there’s been a significant change in the energy mix.

“Renewables haven’t been curtailed; they’ve been able to sell all the power they produce,” he remarked. “That means that renewables’ share of the energy mix has increased dramatically in some countries, demonstrating that the system can be reliable and stable even when renewables account for a very high share of the energy mix.”

As for the price volatility in oil prices that has resulted both from covid-19 and the US-Russia price war, that volatility tends to benefit assets such as transmission and storage, according to Jørgensen.

“So, if covid means more volatility because renewables are now a larger share of the energy mix, then it’s a good thing for these assets,” he said.

CIP expects to reach final close on CI IV within the next nine months according to the statement. Like its predecessors, leverage levels will be kept below 50 percent.

Established in 2012, the firm has five blind pool and two special purpose funds with around €10 billion under management in total.

These include the CI New Markets Fund, which CIP closed on $1 billion in November and represents the firm’s first strategy focusing on emerging markets – Southeast Asia, Latin America and Eastern Europe.

The two special purpose funds are CI Artemis I, launched in 2014 with a total commitment of €392 million from PensionDanmark and dedicated to the DolWin 3 project, a 900MW DC grid connection for wind farms in the south-western part of the German North Sea. The second vehicle in this series, launched in March is CI Artemis II K/S a €300 million fund that has invested into a portfolio of four operating German offshore converter stations comprising a total of approximately 2.8GW transmission capacity. The assets are held in a partnership with Dutch transmission operator TenneT.