CGN Private Equity, a unit of China General Nuclear Power Company, has achieved final close on its China-focused clean energy fund at 3.69 billion yuan ($542 million; €483 million).
The closed-ended vehicle, dubbed CGN Capital Partners Infrastructure Fund III, invests in renewable energy assets in China, including wind, solar and hydro power generation facilities, in a bid to offer its LPs sustainable yield and moderate capital growth over the medium term.
The fund has secured commitments from a range of domestic institutional investors including China’s biggest banks, insurance and asset management companies, as well as CGN Group and China Three Gorges Group, two of the country’s top nuclear and hydro power producers.
Utilico Emerging Markets, a London-listed utility and infrastructure investment company, was among the investors that brought the fund to its final close, Raymond Fung, chief investment officer at CGN PE, told Infrastructure Investor.
The UK investment firm has a mandate to invest in emerging markets in Asia, Latin America, Europe and Africa. Some of the firm’s investments in China include toll roads in Guangdong province, Shanghai International Airport and two gas distributors. Fung declined to disclose the size of the commitment.
CGN Fund III has already deployed 1.3 billion yuan into an existing portfolio of wind and solar assets in Shandong, Yunnan and Hebei provinces totalling 640MW. Fung expects the vehicle to be fully deployed in the second half of 2018 into a portfolio of up to 1.8GW of renewable energy assets.
The fund is aiming to invest in another 600MW of renewable energy assets this year, primarily in wind. Fung said the team has been assessing projects across various renewable sectors, and found that wind projects currently offer the most attractive risk-adjusted returns. He added that the vehicle will be actively looking at solar projects in the second half of this year.
The renewables fund had a target size of 5 billion yuan when it was launched in 2013, but CGN thought it worth concluding fundraising activities early given current market conditions and its desire to deploy the capital quickly, Fung said. He added that the decision had been supported by LPs.
CGN PE currently manages 20 billion yuan across various funds. The firm’s 7 billion-yuan Fund I and 3 billion-yuan Fund II, respectively focused on nuclear power and natural resources, both closed in 2010.