Finnish pension trio to plug €300m into renewables platform

New company has already deployed €90m, acquiring three operational wind farms with a combined capacity of 63MW.

A trio of pension funds in Finland has set up a renewable energy investment company with the aim of deploying at least €300 million.

Elo Mutual Pension Insurance Company, Veritas Pension Insurance Company and the State Pension Fund of Finland (VER) have formed Exilion Tuuli Ky to invest their commitments. Exilion Tuuli Ky will sit as a subsidiary of Exilion, a company formed by the institutions in 2005 to invest in real estate and which now has a property portfolio worth around €600 million.

The new platform has already secured three operational wind farms with a combined capacity of 63MW at a total cost of around €90 million. Although wind investments are its primary focus, the group said that it could also invest in solar and energy storage projects. Jan Schulman, portfolio manager at Elo, told Infrastructure Investor that Exilion Tuuli Ky would be seeking operational assets or sites under construction and targeting an IRR of 6-8 percent. He said that the company also has room to invest in neighbouring Nordic countries.

“It’s an area we want to increase our exposure to because the market is active in Finland,” Schulman added. “There’s a lot going on in the Finnish market, but many of the companies are from abroad and there are not so many Finnish players – one reason being that Finnish market participants are small and few, and the renewable energy area is quite new for many investors.”

French manager Omnes last year made its first investment in the Finnish wind sector, which it plans to extend to a platform of up to 1GW. In March 2019, Ardian and Prime Capital launched initiatives targeting investments in Nordic renewables more widely.

Schulman said the three Finnish pension funds could plough additional funds into the new company, though he stressed that it is currently focused on delivering the early opportunities.

“It is difficult to say at the moment,” said Schulman, when asked if further capital will be plugged in the future. “It depends on how long it takes and what kind of opportunities there are. I think it can be expanded if we have good experiences.”