InfraRed Capital Partners is planning to capitalise on the growth potential of the renewables market in the Americas following the firm’s acquisition by Canadian financial services group SunLife.
SunLife completed the £300 million deal at the beginning of this month. It has taken an 80 percent stake in the London-headquartered manager, which spun out from HSBC in 2011. Sun Life will also co-invest $400 million in new InfraRed investment solutions, including a North America renewables infrastructure fund.
“In growing sectors, you need to become bigger, stronger and operate globally,” InfraRed’s chief executive, Werner von Guionneau, told Infrastructure Investor. “We are strong in Europe and the segments we want to have market share, but we felt in order to be a tier 1 player in the very long term, we needed to have a very strong base in North America.
“We analysed the opportunities with our core competencies and the Americas offers the most relevant growth potential. We saw an excellent opportunity in the Americas, particularly in the renewables space.
“In order to be able to manage a rapid growth and rollout, we thought it would be best to have a North American partner. We wanted a cultural fit and a distribution fit and access to capital for real assets. We also thought at this stage it would be beneficial to have a seed capital line that was material in order to launch new products. We found this in SunLife.”
He added that the new fund will look to replicate much of what InfraRed has already achieved in the sector in Europe. The firm already has a sizeable renewables portfolio, with London-listed fund TRIG the owner of more than 1.5GW of onshore and offshore wind, solar and battery storage projects, predominantly in the UK and France.
The group’s generalist global infrastructure fund series – the fifth and most recent of which closed on $1.2 billion in late 2018 – is also a significant investor in the sector. Von Guionneau said these vehicles will continue to have a place under the new leadership.
“That’s not going to change. This is added growth,” he insisted. “This will help us to accelerate and de-risk our growth in the Americas. We can do this on a different scale relative to what we would have been able to do on our own. The opportunity isn’t going to sit around for the next 20 years.”
Prior to the completion of the SunLife deal, InfraRed published its updated sustainability policy in June, the formulation of which has been led by Kate McKeon, the firm’s sustainability manager. McKeon has recently taken on the new role in London, having previously been an investment executive in InfraRed’s office in Sydney.
“We thought it was particularly important, in order to penetrate all the processes that relate to our investments and operations, to bring someone in from the origination and execution team who had a passion for sustainability into the position and have an in-depth understanding of how the business works,” explained von Guionneau.
He added that the new policy was designed following input from the whole InfraRed team. He said that that while the policy of investing sustainably is not new, there are subtle differences compared with the past: “Ten years ago it was much more what we wanted to do. We wanted to create high-quality infrastructure correspondent with our strategy. This hasn’t fundamentally changed, but today’s focus is equally on how we are doing it.”
McKeon also said that InfraRed is looking at developing a stronger reporting framework for sustainability monitoring of its assets, with the aim of introducing an internal benchmarking system.
“We’re establishing our own framework and then looking to measure sustainability KPIs against each of our assets,” she said. “We work with external organisations on some of our listed funds, to help us establish relevant frameworks, but I think from an unlisted perspective we know those assets very well and what data is relevant. We will then get external consultants to audit our performance across both listed and private funds.”
However, there remains plenty of work to do in standardising such processes, according to von Guionneau.
“The only internationally recognised framework to measure business performance are the accounting rules,” he said. “Everything you can’t quantify and express in figures is much more difficult to benchmark and communicate objectively. How we measure and compare success in implementing sustainability into an organisation is challenging and a lot of effort is currently spent on this aspect. It will take a while before we get reporting standards on a par with reporting based on accounting standards.”