Australian fund manager Impact Investment Group is set to expand its debt investment offering as it looks to meet increased demand for specialist lending services within the clean energy infrastructure sector, including the potential establishment of its first debt fund.
The shift in focus of government-backed lender Clean Energy Finance Corporation away from wind and solar farms to other clean energy projects has left a debt funding gap in the sector, according to Impact Investment Group’s head of renewable energy infrastructure Lane Crockett.
“The CEFC was originally set up to help wind and solar farms get off the ground. Now that the market has matured, it has moved on to different things and they’ve left that space open,” Crockett told Infrastructure Investor.
“What we’ve noticed in the last year is that developers are seeking finance in different ways to try and get their projects off the ground – they’re having to be slightly more creative these days because the market is a bit more challenging.
“We come from a place of wanting to catalyse projects and support the transition to clean energy, [and providing specialist lending services] is a way that we can help that happen.”
With an aim to fund a range of renewable asset types including solar, wind, hydro and storage, the firm intends to offer lending options catered to the needs of clean energy infra developers seeking a more nuanced approach to debt investment than most traditional lenders are inclined to provide.
“The way that [banks] work, they have certain limits and if the parameters are outside the normal limits that they are comfortable with… then they just don’t go past those limits,” Crockett said.
“If you look at mezzanine loans, they’re quite a traditional loan product, but it just doesn’t tend to be a product that the banks will do – because they’re offering senior loans, they don’t like to do mezzanine loans on top of their own senior loans – so we find that is an area of opportunity as well.”
Crockett said IIG would work towards launching a private debt fund in future, but that it did not have a set timeline in mind.
“The way we tend to work with funds is we get some seed opportunities into the pipeline first and then we will go out and raise for a debt fund. We’re in that first phase at the moment of developing those seed opportunities,” he said.
In September, the firm launched fundraising for the Impact Alternatives Fund, an open-ended fund of funds vehicle aiming to invest up to 30 percent of its capital in renewables across both IIG and externally-managed funds.