InfraRed eyes 1.5GW subsidy-free Spanish solar after $1.2bn fund close

Up to 12 projects will be developed over the coming years through the seventh investment of InfraRed’s fifth fund.

InfraRed Capital Partners has agreed to acquire a 1.5GW solar portfolio in Spain following the close of its fifth infrastructure fund on $1.2 billion at the end of last year.

The London-based firm’s agreement with Progressum Energy Developments, part of the Bester Group, will see up to 12 subsidy-free sites developed, with the first of the portfolio to begin construction in 2020.

The Giralda portfolio is the seventh investment made by InfraRed Infrastructure Fund V, which closed towards the end of 2018 on its hard-cap of $1.2 billion. The fund targets net returns of between 11 and 13 percent and received commitments from LPs based in geographies including the UK, US, Italy, Israel and Taiwan, according to filings with Companies House.

The entire portfolio will cost “several hundred million” in equity from InfraRed, while it “may look to introduce a debt portion over time”, InfraRed’s co-head of infrastructure James Hall-Smith told Infrastructure Investor.

““We are currently working with Bester to deliver a substantial solar farm in Mexico and they were looking for a financial partner here and saw us a natural fit,” he said. “This deal is core to our fund’s strategy of securing assets outside of an auction process.”

Hall-Smith added that, “we intend to agree power purchase agreements for a majority of the energy generated,” with the remainder not subject to any regulatory regime. The projects were not sourced from a government-mandated auction held last year.

InfraRed Infrastructure Fund V has now “committed or invested” about half of the fund’s proceeds, according to Hall-Smith. Other investments include the aforementioned Mexican solar transaction, a combined-cycle power plant in Mexico, the formation of a North American energy storage company and a toll road in Colombia.