SPARX hits $424m final close on brownfield renewables fund

The new fund has a target IRR of 5% and already owns a portfolio of 12 assets purchased from a previously liquidated SPARX fund.

SPARX Group has announced the final close for its new brownfield renewable energy fund on approximately ¥47 billion ($423.6 million; €363.5 million).

The SPARX Renewable Energy Brownfield Fund was launched in November 2017 and will be managed by SPARX Asset Trust and Management Co, a subsidiary of SPARX Group.

Investors in the fund include SPARX Group itself and a raft of LPs, including: AEON Bank, Bank of Nagoya, NEC Capital Solutions, Nippon Life Insurance Company, Ricoh Leasing Company, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Finance and Leasing, Sumitomo Mitsui Trust Bank, Taiyo Life Insurance Company, the Tochigi Bank, and Toda Corporation. SPARX Group declined to disclose the amount of its own investment or that made by any LPs.

The Renewable Energy Brownfield Fund is a closed-ended vehicle with a term of 20 years and a target IRR of 5 percent, according to a company spokesman. Its investment period will last until 31 October 2020, with capital to be deployed in brownfield projects in Japan.

SPARX Group said in a statement the fund would use a feed-in-tariff approach, producing dividends for investors from the start by investing in operational assets, with no development risk. It also said that investing in renewable energy facilities has proved attractive for LPs who are thinking carefully about their approach to ESG.

SPARX Asset Trust and Management Co is “eager” to acquire new assets for the brownfield fund, a spokesman said, but declined to name any specific targets. The company said in a statement it hopes to increase the value of the fund’s assets under management to approximately ¥150 billion through the “future acquisition of additional facilities”.

The brownfield fund already owns 12 operating solar assets with a combined capacity of 99MW that were purchased from the SPARX Public-Private Green Energy Fund, an ¥8.8 billion vehicle that was liquidated in January this year. SPARX declined to disclose the purchase amount.

That private-public fund included contributions of ¥1.5 billion from the Tokyo Metropolitan Government and ¥200 million from SPARX Group, among others. It was focused on developing greenfield renewable energy projects across Japan.

By the time the fund was liquidated, it had increased its principal by about 1.6 times and achieved a gross IRR of approximately 10 percent, SPARX said in a statement.

As well as renewables, SPARX Group invests in equities in Japan and Korea, and in real estate in Japan. The group’s assets under management stood at approximately ¥1 trillion in April 2018.