KGAL secures ESPF4 hard-cap extension ahead of September close – exclusive

The hard-cap for the German firm’s fourth renewables fund now sits at €750m after more than 90% of investors approved the increase.

German asset manager KGAL plans to close its fourth renewables fund by the end of September after LPs approved an extension to its hard-cap, its head of infrastructure Michael Ebner told Infrastructure Investor.

Enhanced Sustainable Power Fund 4 had a target of €500 million when it was launched in 2016, with a hard-cap of €600 million. However, Ebner confirmed this had been increased to €750 million as the fund sought to accommodate additional investors before a planned close by the end of the third quarter.

The fund’s current volume sits at around €500 million. Its investors comprise pension funds, insurance companies and family offices from across Europe, in addition to €100 million from the European Investment Bank.

Ebner said ESPF4 is KGAL’s first renewables fund structured as a Luxembourg vehicle rather than as a German limited partnership. He said this had enabled it to significantly broaden its investor base compared with KGAL’s previous funds.

According to Ebner, KGAL is targeting a net IRR of 7-9 percent and has deployed around €250 million in both greenfield and brownfield assets from its latest fund, including in the UK, Bulgaria and Italy. It has also invested in an onshore wind farm in Sweden, where it recently concluded a 10-year power purchase agreement with Amazon.

The ESPF4 portfolio includes KGAL’s first offshore wind investment. In February, the firm teamed up with compatriots Commerz Real, Ingka Group and wpd invest to take an 80 percent stake in the 402MW Veja Mate offshore wind farm in Germany, which has been operational since 2017.

The firm has been investing in renewables since 2003 and raised €1.6 billion across its previous three funds, the third of which was closed in 2015. It had invested in projects with a total investment value of €2.8 billion as of February 2019.