SUSI Partners is expecting to hold a first close of up to €70 million by the end of this year for its second energy efficiency investment vehicle, Infrastructure Investor has learnt.
The fund manager, based in Zurich, Switzerland, is targeting €300 million in commitments by the end of 2019 and has set a hard-cap of €400 million. SUSI has structured its Energy Efficiency Fund II as a 15-year closed-ended vehicle that will take on a maximum of 50 percent leverage.
The fund will follow a similar strategy to its €200 million predecessor. According to a presentation viewed by Infrastructure Investor, SUSI will invest in industrial and streetlighting LED retrofits, HVAC, heat pump, combined heat and power upgrades, and the refurbishment of public buildings.
Unlike Fund I, which invested in assets exclusively in Europe, Fund II will deploy 20 percent of its capital in other OECD markets, particularly the US. A source familiar with SUSI said the firm’s strategy is to gain market insights and build an investment track record in the US, with the goal to potentially raise a fund dedicated to the country.
Unlike typical infrastructure transactions, which are backed by a real asset, such as a road, power plant or telecommunications tower, energy efficiency investments are seen as cash-saving measures that optimise a structure’s performance and reduce carbon emissions. SUSI’s strategy is to deploy capital into energy efficiency systems and recoup its investment from savings on the energy bill.
“The fund takes the necessary investments on its own balance sheet and receives part of the guaranteed energy savings in return,” SUSI’s fund presentation stated.
The firm’s first efficiency fund, which closed in 2015 and is almost fully deployed, is generating a 6.1 percent gross return and is distributing a cash yield of around 4 percent, according to the source familiar with the firm. The presentation noted that “approximately 2 million tons of C02 savings will be achieved by SEEF I’s investments until the end of [the] investment period”.
SUSI Partners CEO Tobias Reichmuth talks about the nascent energy storage sector at this year’s Global Summit, in Berlin.
In addition to energy efficiency, the firm also focuses on renewables and energy storage. SUSI has raised two renewables funds with a combined total of €582 million in commitments. It closed the world’s first energy storage fund in June on €252 million.