London-based Glennmont Partners has reached a final close on Clean Energy Fund II, its second vehicle, on its hard cap of €500 million.
The fund manager, which launched the vehicle shortly after spinning out from French lender BNP Paribas in January last year, initially targeted €450 million.
The 10-year fund garnered commitments from both existing and new limited partners (LPs) largely made up of institutional investors, including the European Investment Bank which invested €50 million.
While a majority of LPs in Fund I came from Europe and Asia, Fund II gained the backing of a number of institutions from the US and the Middle East, Peter Dickson, a partner at Glennmont, told Infrastructure Investor.
LPs in the firm’s first fund include Dutch pensions PGGM, Timeos Pensioendiensten and Pensioenfonds Zorg en Welzijn; asset manager SPF Beheer BV; and BNP Paribas Investment Partners, according to Infrastructure Investor Research & Analytics.
The fund targets onshore wind and ground-mounted solar in Western Europe, with a view to provide investors with “very steady and predictable yield without taking disproportionate levels of risk”, Dickson said. At the portfolio level, the vehicle has a target IRR in the low to mid-teens, with hurdle rates possibly hitting below or above the pool average for individual assets.
Dickson expects leverage across the vehicle’s portfolio to be in line with Fund I, which was geared at about at 60 percent. The firm does not take development risk but feels comfortable with buying assets undertaking construction.
The fund is likely to focus on the UK market in the short term, with a potential flow of deals coming from France, Ireland and the rest of Western Europe. “UK biomass is an area where we are putting some time right now,” Dickson said.
BNP Paribas Investment Partners acted as global placement agent for the fund, while Global Private Equity acted as sole placement agent in France, Canada, Denmark, Norway, Finland, and the Middle East.
Glennmont’s first fund, now fully committed, manages operating projects in the UK, Ireland, France, Italy and Portugal totalling 354 megawatts collectively.