A former partner at placement agent FIRSTavenue has launched a renewable-energy focused multi-manager investment firm, as it seeks to provide wider diversification in the sector to investors.
Renewity was set up last year by David Hunter, a partner and co-head of international sales at the placement agent for nearly nine years up to 2018. He has been joined by co-founder Wendy Mayall, chief investment officer at Unilever from 1995 to 2011 and who has since held roles at insurer LV=, Standard Aberdeen and The Pensions Trust.
The duo believe that an “absence of scale and speed” is preventing institutional investors from contributing to the annual investment of around $300 billion in renewable energy needed to meet the Paris Agreement goals, and believe a multi-manager approach can help fill part of this gap.
“Investors want diversification; they don’t want just one strategy or managers. Multiple managers gets you a better spread of countries and sectors,” Hunter told Infrastructure Investor. “Roughly two-thirds of the managers out there are only in one or two countries or sectors. And a third of managers in the market have funds which offer deal, country or sector exposure in areas the managers have not yet done a deal on. Additionally, as deep-pocketed new entrants join the fray, team instability risks are rising. In sum, that’s quite an extraordinary manager execution risk to take on via just one or two manager appointments.”
Hunter adds that he has experience of dealing with many of the dedicated renewables GPs from his time at FIRSTavenue, and that Renewity now has tracked about 100 renewables managers in the marketplace for its new product.
“We’re looking at an open-ended private markets fund to allow us to continually shift the allocations, allocate new money and disinvest and harvest assets regularly to distribute capital, providing a yield of about 4-6 percent,” he said. “We’ll also aim to launch an investment trust next year, which would have daily and minute by minute liquidity.”
Hunter believes this approach will provide investors with a fairer risk than what’s currently on offer in the market and which will provide the scale, speed and liquidity investors require.
“The institutional investors are the laggards,” he said, adding that Renewity will be focused around the world with large ticket writers. “Utility companies and oil and gas majors are all investing much more rapidly than institutional investors. The investment industry doesn’t quite have the product set right, but investors all want to do more renewables investment.”
Hunter added that some of investors’ typical concerns hinge on an overcrowding in developed markets around operational wind and solar assets. He added that investors are also keen on exploring new technologies within the energy-transition space.
Renewity has also hired Ravi Neville, former head of real assets at Aztec Group, as chief operating officer, while Stephan Breban has been appointed as head of research.