Exclusive: Aquila eyes €300m first close for hydro fund

At least five investors are doing due diligence on the innovative European vehicle, which is targeting investments worth around €1bn.

German asset manager Aquila Capital is gearing up to reach a €200 million to €300 million first close for its debut European hydropower fund later this year, Infrastructure Investor has learnt.

The first close amount will depend on the availability of assets to be readily invested in. At least five investors are doing due diligence on the fund and its pipeline of assets, ahead of the fourth-quarter close.

The fund, which is targeting an undisclosed amount and has a minimum subscription of €10 million, is looking to invest in five to 10 hydro generating portfolios worth around €1 billion. It is aiming for an IRR of between 7 and 9 percent and offering long-term stable cash yields, low volatility and an avoidance of government subsidies.

The SICAV-SIF vehicle will also invest alongside Aquila’s other institutional mandates, including the €500 million hydropower platform that it formed with Dutch pension APG Asset Management in July 2014.

Last November, Aquila closed its third hydropower deal in 18 months with the acquisition of Norwegian small-scale hydropower plant operator Smakraft. The deal added 45 operating plants generating over 500GWh annually and tightened Aquila’s grip on the Norwegian hydropower sector.

In addition to Smakraft, which it bought for an undisclosed amount from shareholders Statkraft, Agder Energy, BKK and Skagerak Energi, Aquila owns stakes in three Norwegian hydropower operators.

It was unclear whether Smakraft was acquired using funds from the APG mandate and/or the hydropower vehicle, but Aquila had previously mentioned that some of the fund manager’s Norwegian acquisitions had been warehoused for the hydropower vehicle.