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Renewables-focused Infradebt nabs A$200m separate account

The commitment from Grok Ventures will enable the infra debt fund manager to grow its project finance activities, Infradebt CEO Alexander Austin says.

Renewables and social infrastructure-focused Australian debt fund manager Infradebt has attracted a A$200 million ($143.7 million; €128.6 million) capital commitment from private investment firm Grok Ventures, which will be held in a separately managed account.

Grok Ventures – which is owned by billionaire Atlassian co-founder Mike Cannon-Brookes and his wife Annie Cannon-Brookes and which last week partnered with Brookfield Asset Management in an A$8 billion takeover bid for AGL Energy – has also acquired a stake in Infradebt itself. Infradebt declined to comment on the size or value of Grok’s investment in the business.

Speaking to Infrastructure Investor, Infradebt chief executive Alexander Austin said the first loan by the fund manager following Grok Ventures’ investment will be a A$35 million senior debt facility to fund the construction of renewable energy and storage developer Genex’s new battery in Bouldercombe, Queensland. The 50MW Bouldercombe Battery Energy Storage System Project is expected to be operational in the second half of 2023.

Grok Ventures is also a cornerstone investor in Infradebt’s flagship fund, the 2017-vintage Infradebt Ethical Fund, alongside fossil fuel-free superannuation fund Future Super.

IEF was created by Infradebt while in the process of constructing a fixed-income portfolio for Future Super that would comply with the superfund’s strict ethical screening process. Future Super has increased the size of its investment in the fund over time and it now stands at A$42.8 million, according to the fund’s website.

Since its launch, IEF has gone on to finance more than 30 projects spanning renewables and social infrastructure, providing senior debt finance for relatively small projects that tend to be overlooked by traditional project finance lenders. More than 80 percent of the IEF portfolio focuses on renewables including wind, solar and behind-the-meter generation projects, Austin said.

“IEF will continue to grow, and it will be very much focused on the senior debt end of things. The capital commitment from Grok [Ventures] will allow us to do a wider range of investments going forward,” Austin said.

“Renewables and decarbonisation will be a key focus of our activity. We have a very deep understanding of the energy system in Australia and the whole supply chain of electricity [and] there’s a whole range of activities which fit within that, particularly where it’s an infrastructure, real asset-focused activity that has a significant energy or decarbonisation component.

“There’s an enormous amount of capital expenditure that will need to occur over the next few decades in that space as we effectively retool the entire economy for a low-carbon world.”

Austin said debt had an important role to play alongside equity, government policy and the advancement of technology in helping the transition to a low-carbon economy.

“Debt can help [bring] the cost of capital down. There is that real feedback loop [which] we can see in the history of wind and solar. If you go back 10, 20 years ago, [these] were incredibly expensive technologies that could only work with the benefit of a government subsidy of one sort or another. But as they scale up, as the construction cost comes down and the operating cost comes down, you can then [reach] price parity,” he said.

“Getting the cost of capital down is part of the solution of getting to price parity, getting to a cheap energy transition to a low-carbon economy.”