First close for Foresight’s debut infra debt fund

Foresight Group, the UK fund manager, has announced the first close of its Foresight Italian Green Bond Fund on €70 million.

The firm is aiming to post a second close by the end of this year as it targets €200 million altogether for its first infrastructure debt fund. The firm also says that the fund is the first dedicated infrastructure project bond fund in the Italian market.

In a statement, Foresight said interest had come from banks, insurance companies and family offices – including those from Italy – as well as the European Investment Bank under the 2014 Juncker Plan.

The fund will target small and medium-sized projects in renewable energy generation including solar, wind, waste-to-energy, biomass, anaerobic digestion and energy efficiency (including public lighting, cogeneration and district heating).

It will fully underwrite bonds which are rated investment grade, are fully amortising and listed on the Milan Stock Exchange’s ExtraMot Pro segment – targeting returns of between 6 and 8 percent. The fund is expected to complete its first investment before the end of March.

Typical projects will have a debt capacity of €5 million to €15 million, a niche part of the market that Foresight believes is not well served by banks and other sources of capital.

“There will be considerable financing requirements in Italy over the coming years in view of the significant investments that are planned, both in terms of renewable energy generation and energy efficiency solutions as part of the National Energy Strategy.”

The Italian government ratified the National Energy Strategy in November 2017. The 10-year plan aims to phase out coal-fired power generation by 2025 and plans for renewables to account for 28 percent of power by that time.

Based in London, with other offices including Rome, Foresight Group has £2.8 billion of assets under management in private equity and infrastructure. It has strategies devoted to solar infrastructure and bioenergy.