KGAL picks up 50% stake in renewables developer

The German asset manager expects approval timelines for renewable projects to shorten as Germany seeks to generate 80% of power from green sources by 2030.

KGAL has acquired 50 percent of GP Joule Projects, a German developer of wind and solar energy projects, “to drive the energy transition, and to take advantage of the immense growth opportunities [in renewables] in Germany and across Europe”.

The firm is funding the acquisition through Enhanced Sustainable Power Fund 4 and 5. The fourth fund closed on €750 million in October 2019 and was more than 90 percent committed by last August; the fifth fund is still in fundraising mode, targeting the same amount.

“KGAL has funded greenfield projects in the solar PV and the wind sector for quite a long time, but always on a single asset or on a fixed portfolio basis,” Michael Ebner, managing director of sustainable infrastructure at KGAL Investment Management, told Infrastructure Investor.

“This investment is the first investment on the corporate level of a developer with an existing pipeline of projects but with the target not only to implement the existing projects but to grow the business significantly by adding new development projects,” he explained.

Ebner declined to comment on financial details of the acquisition, except to say that “a significant amount of the capital is growth capital for the joint venture and will be used to grow the existing pipeline and the expansion of GP Joule Projects”. ESPF 4 and ESPF5 have acquired equal stakes in the developer.

Part of the GP Joule Group, GP Joule Projects develops renewables projects along the full value chain, from securing the land and tendering subcontractor services to the overall business concept for the operation of the completed plant, according to a statement. It sells the projects at the ready-to-build stage. Since being founded in 2009, the company has developed more than 20 wind farms and 130 solar parks with a total output of more than 1GW.

GP Joule focuses primarily on Germany, which seeks to increase the share of electricity generated by renewable sources to 80 percent by 2030 from 40 percent at present. “Therefore, the approval procedures for renewable projects are likely to be noticeably shortened,” Ebner said in the statement.

However, both KGAL and GP Joule Projects plan to expand across Europe. KGAL is already active in 10 European countries and, when deploying ESPF 4, it focused on Eastern European opportunities in countries including Bulgaria, Poland and Hungary.

ESPF 5, which KGAL describes as its first ‘dark green’ fund, is designated as an Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation. According to Infrastructure Investor data, KGAL has so far raised €260 million for its latest vehicle.