The UK government wants to close its £400 million ($524.8 million; €448.7 million) Charging Infrastructure Investment Fund by early next year, following a launch in November or December, it revealed today.
The fund’s request for proposals noted the UK Treasury will likely select either one or two fund managers for the CIIF, although there is a possibility this could rise to three. The manager would be required to raise at least £200 million from the private sector in addition to the £200 million provided by the Treasury.
Investment parameters for the fund are set to be made all-encompassing and would include equity, mezzanine and possibly senior debt provisions for physical chargepoints, software and platforms for charging infrastructure, required grid connections and battery storage solutions. The government acknowledged this could include more than one fund to focus separately on more “private equity, growth capital-type” deals from investing in infrastructure-type projects.
A shortlist of about three managers will be drafted in October, with the eventual selection to be made in either November or December, according to the Treasury. CIIF managers will be expected to have raised private capital by “early 2019” and be ready to start investing, targeting a “commercial return”, while the government is still considering whether to have a three- or four-year investment period.
A Treasury source said specific return targets will be defined by the managers while more precise deadlines will be provided in due course.
‘Difficult valuation issues’
Fund managers with existing investments in the sector will be viewed advantageously, the Treasury confirmed, and it also raised the possibility of these managers seeding the funds with these assets. “However, inclusion could raise difficult valuation issues and managers should demonstrate how they would seek to address these issues within their response to the RFP,” it added.
The RFP also stated that “lower fees and charges will be considered a positive” and should reflect the role of the Treasury as a major investor. Larger proposed funds and a manager’s ability to invest its own capital will be seen favourably, although the Treasury said more realistic and deliverable strategies are more important.
The CIIF has been launched in a similar vein to the Digital Infrastructure Investment Fund, which the Treasury set up last year. That resulted in £400 million of government capital spread across three funds managed by Amber Infrastructure, Infracapital with Cameron Barney and M&G.
The government has already engaged in “extensive market engagement” for the CIIF and will be looking at as “wide a selection as possible” of fund managers, Philippa Eddie, commercial finance specialist at the Infrastructure and Projects Authority, told Infrastructure Investor’s Renewable Energy Forum in March.