The UK insurance firm has agreed to match 20 percent of the capital raised by the fund, up to €100 million. The vehicle has a €500 million target and a €600 million hard-cap.
The move marks a return by L&G as a cornerstone investor in NTR’s funds after it agreed in 2015 to back the group’s first vehicle with up to 47.5 percent of commitments. Further investments from NTR, the Ireland Strategic Investment Fund and Strathclyde Pension Fund brought it to a close in 2016.
“By using our balance sheet capital in this way, we lead the way for other institutional investors to participate in the development of renewable energy infrastructure, as well as make strong returns for our shareholders,” L&G told Infrastructure Investor.
L&G has this time been joined by new investors such as the European Investment Bank (€84 million), UK pension pool Brunel Pension Partnership and the Trinity Endowment Fund, as well as backing again from NTR. A spokesman for NTR said the fund is expected to close during 2019.
While the NTR Renewable Energy Income Fund II retains the same 8 to 9 percent net target return as its predecessor, as well as its 25-year term, the strategy has been significantly broadened to include wind, solar and possibly storage projects across several European markets. NTR Wind 1 was restricted to wind sites in the UK and Ireland.
NTR estimates about €1.5 billion to be spent on pre-construction and operational sites in equity and debt, with 20 to 25 percent of this to be invested in the UK.
“The fund expects to acquire projects backed by a mixture of feed-in tariffs, feed-in premiums, or projects without government subsidies, but backed by long-term power offtake contracts,” the NTR spokesman said.
It has already secured two investments, buying a 38.4MW operational solar portfolio in the UK for €61.3 million, and two wind farms in France with a total capacity of 20MW for about €35 million.