Spring first close planned as UK names Zouk as £400m EV infra fund manager

The private equity and infrastructure manager has already held discussions with ‘investors from all walks of life’, partner George Ridd tells us.

The UK government has provisionally selected Zouk Capital as the sole manager for its Charging Infrastructure Investment Fund following a request for proposals last year.

Zouk will be expected to raise at least £200 million ($257.7 million; €227.7 million) from private investors, which will be matched by £200 million from the UK government. The private equity and infrastructure fund manager is planning to hold a first close in the Spring once exclusive negotiations with the government have been successfully concluded, partner George Ridd told Infrastructure Investor.

“Our vision of what the UK electric vehicle market is aligned very closely with what the government is looking for,” he said. “Zouk is a sustainable economy investor and the fund is going to create an open-access platform that’s run on clean power, reliable, easy to use, very accessible and geographically spread and the government wants to ensure all EV drivers across the country have access to this public network.”

Zouk has already been engaging with potential LPs for the fund. As for targeted returns, Ridd declined to comment beyond the “commercial returns” strategy outlined by the government in the proposal.

“We’ve had really interesting discussions with lots of different investors from all walks of life,” Ridd added. “The strategic investors are quite interested, so those who have an interest in the mobility or power sectors. It’s obviously got very strong ESG and decarbonisation metrics to it as well, given the need to clean up emissions of the transport sector and the need to improve air quality. There are a lot of investors out there with particular ESG mandates interested in this. There are also the bigger international, inward-looking investors who are comfortable with the UK landscape, they like the overall theme of electric vehicles and look positively the policy environment the government (has?) created.”

Ridd said Zouk’s vision is already being demonstrated through its two deals in the sector: its £13 million investment in Instavolt in 2016 and £13 million investment in EO Charging last year. Both transactions came through its €220 million Renewable Energy & Environmental Infrastructure Fund II, closed in 2014. The fund was 67 percent committed as at the end of last year, according to Janus Henderson, and generating a net IRR of -9.1 percent, although the investor noted this is likely to swing once the assets become operational and are exited, as per the strategy.

Last year’s request for proposals raised the possibility that the successful manager could seed the fund with existing relevant assets. Ridd said Zouk was unable to confirm whether this would happen at this stage, although it remains a possibility.

The government had also envisioned the fund making investments across the equity, mezzanine and possibly senior debt spaces, which could have included selecting two managers, as it did with the similar vehicle Digital Infrastructure Investment Fund in 2017.

“Our primary focus will always be equity,” Ridd explained. “We still very much see this as an equity market for the time being. We believe that more debt will come into the space and there are people who we talk to in the market who are interested in debt structures.”