Australia and US-based New Energy Solar Manager has launched a new US solar fund to be placed on the London Stock Exchange, seeking $250 million from UK investors.
The subsidiary of Australian asset management group Walsh & Company has already launched the New Energy Solar Fund on the Australian Stock Exchange, raising over A$500 million ($358.5 million; €269.7 million) in proceeds and investing in several Australian and US solar assets.
However, NESM believes there is a substantial UK-based investor community that would like exposure to its US pipeline and has launched a London-listed vehicle focused on their requirements.
“We’ve been speaking to a lot of institutional investors and we found in the UK there’s a really sophisticated and well-educated group of renewable energy investors because of the [London-listed] solar income funds,” John Martin, chief executive of NESM, told Infrastructure Investor. “Discussions with them showed they wanted to invest in the US and didn’t want to invest in Australian dollars through an Australian vehicle. Instead, we created for them this US solar fund listed on the LSE in US dollars to give them access to this market,”
Martin added that the listing would offer diversification away from sterling ahead of a possibly volatile period while offering risk-adjusted returns.
“We found a big demand among institutions that go for listed stocks that had trouble getting access to a US renewables investment strategy,” he explained.
NESM plans to deploy the funds within six months of listing, investing in construction-ready assets with a targeted return of 7.5 percent over the long-term. It could also include some co-investment from the Australian-listed fund, although the London-listed vehicle won’t include any seed assets.
“We find seed portfolios are tricky because you’re not sure you’re getting the best deal for investors,” Martin said. “We would rather draw up a very large pipeline and cherry-pick the best transactions possible.”
While the Australian-listed fund will continue investing in the US, Martin said there is an “aversion from global investors” towards Australian renewables owing to continued policy volatility.