French renewables fund manager Mirova is set to launch its fifth renewable energy vehicle, targeting €1 billion in commitments.
The manager said in a statement that Mirova Energy Transition 5 Fund is currently in the “project phase”. Raphaël Lance, head of Mirova’s energy transition infrastructure funds, told Infrastructure Investor that the firm is planning to hold a first close on the vehicle in early Q2, possibly at about 30 percent of the target. The fund has a hard-cap of €1.3 billion.
Lance added that Eurofideme-4, the fund’s predecessor which closed in November 2019 on €857 million, is about 90 percent invested. Although the energy transition strategy for the fifth fund broadly remains the same, it will also be able to invest in offshore wind and up to 10 percent in OECD countries outside Europe. Mirova said in a statement that the fund could, for example, invest in projects in Asia with European developers the firm already has relationships with.
It will also ramp up its efforts in non-generating energy transition assets, such as electric vehicle charging and hydrogen. Non-generation assets, including battery storage, comprised about 15 percent of Eurofideme-4, although Lance said this could go up to 25 percent in the latest fund. Mirova has to date invested in a hydrogen-fuelled Parisian taxi operator, as well as electric mobility group DriveCo, which focuses on installations of EV charging infrastructure rather than operating the infrastructure itself.
“Charging infrastructure has too much embedded traffic and obsolescence risk for an infrastructure deal we would like,” Lance said. “In hydrogen, we have done our first deal and we are also looking at power-to-gas and grey-to-green hydrogen. We need to have a look at the models which make sense, and those models are not completely available yet so we are cautious in what we do.”
Despite the acceleration of growth in the sector over the past year, Lance does not believe the European renewables market is too concentrated and is confident Mirova can meet its high-single digit return target.
“We see more and more investors are willing to increase their impact investments,” said Lance. “It’s not overcrowded, especially if you can bring some value, such as taking some development risk.”
The Natixis-affiliated Mirova launched its first fund in 2002. It has since financed more than 300 projects representing over 5.7GW of capacity.