NextEnergy eyes further capital raising as investors ‘re-engage’

The solar manager has recently launched a new private UK solar fund, while it continues to fundraise for its international fund NextPower III.

UK-based solar fund manager NextEnergy Capital is planning further fundraising over the next couple of months as it seeks to capitalise on increased investor interest in the asset class.

The manager remains in fundraising mode for its unlisted NextPower III vehicle, a 2018-vintage international solar fund which held a second close of $280 million ahead of a $750 million target. The firm expects to close fundraising by the middle of next year, chief executive Michael Bonte-Friedheim told Infrastructure Investor.

“We did see at the outset of this crisis a significant slowdown in investor conversations but we’ve actually seen a recent pickup in those again,” he added. “Investors have done the portfolio analysis, dealt with the initial crisis and we now see them re-engaging with our fundraising projects. Part of that is investors now feel more comfortable but also that our sector is particularly attractive to these investors.”

The fund has five assets either under construction or in operation, including both community and utility-scale projects in the US and a 108MW site in Mexico. It has also identified India for potential opportunities.

However, NextEnergy is now fundraising on two fronts. Last week, it announced it had launched the NextPower UK ESG fund, which has a £500 million ($631 million; €558 million) target, will initially house two subsidy-free UK solar sites currently under construction with at joint capacity of 115MW. The firm has secured £100 million of debt financing from Santander.

NextEnergy will target further UK subsidy-free sites and has about 600MW of a development pipeline it is bringing through and will transfer to the NextPower UK ESG fund at a later date.

Bonte-Friedheim said the effect of covid-19 on construction projects has been minimal but said the impact of the lower power demand on future greenfield projects will depend on how the world looks post-crisis.

“The impact this crisis will have on greenfield will depend on how quickly demand recovers,” he explained. “We have power grids which were designed as a result of a demand 20 percent above where we are now. Before we think about needing new-build generation and where that should come from, we should get back to similar levels of demand and consumption.”