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Quercus holds €150m first close for three renewables funds

The investment manager expects to see a second close in the first half of next year, and is aiming to raise a combined €500m for all three funds by the end of 2018.

Quercus Assets Selection has held a first close for three Italian and European renewable energy funds after raising €150 million.

The investment manager said it is aiming to raise a combined €500 million for all three funds by the end of 2018 and will likely hold a second close in the first half of 2017. Both its Italian Solar fund and Italian Wind fund are targeting €150 million, and its European Renewables fund is targeting €200 million.

Quercus said the €150 million it has raised so far has come from blue chip institutional investors including life insurance companies, banking foundations and mutual and pension funds. All three funds are targeting a 6 percent annual dividend yield, distributed twice a year, and an internal rate of return above 11 percent, according to a statement. The firm is raising three funds at once to “provide investors with choice and flexibility”.

Diego Biasi, co-founder and chief executive of Quercus said the aim of the funds is to capitalise on “the need for consolidation in the European renewable energy space”.

Quercus chairman Vito Gamberale added that the goal is to buy brownfield facilities that have been in operation for a minimum of three years. “This aspect, along with defined rates attributed to each facility, translates into returns that match high yield bonds while also benefitting from investing in investment grade assets whose returns are totally uncorrelated from market volatility,” he said.

Over the past six years, Quercus said it has raised two funds that have invested around €200 million globally, generating an annual dividend yield of 5 percent and 6 percent and an IRR of between 9 percent and 10 percent.

Italy is one of the largest solar markets in the world, but it is highly fragmented with thousands of owners across its 18GW of installed capacity. Gamerbale told previously told sister publication Low Carbon Energy Investor that this makes for a good opportunity to begin consolidating assets.

The firm, working out of London and Milan, held a pre-close in May to use capital from fundraising to cover its acquisition of Antin Infrastructure Partners’ solar portfolio. Quercus partnered with Swiss Life to purchase the 77.1MW Antin portfolio, the fifth largest solar portfolio in Italy at the time.