UK’s Octopus and Korea’s KIS launch $140m renewables JV

The UK asset manager plans more “bespoke renewables portfolios” in partnership with institutional investors across the globe.

Korea Investment & Securities, a Korean financial services provider, has teamed up with UK asset manager Octopus Group to launch Renewable Energy Income Partnership II – a £107 million ($140.8 million; €120.3 million) closed-ended 25-year vehicle.

The Korean firm underwrote the transaction, which entails selling 15 solar power assets that Octopus previously managed to REIP II, using equity and senior debt. KIS will retain the equity, while the debt will be acquired by three Korean insurance companies: Samsung Fire & Marine Insurance, KB Insurance and Hyundai Marine & Fire Insurance.

Octopus declined to disclose the expected returns of the fund or provide details about the solar assets acquired, although it said that they were “geographically well-spread” across the UK.

“We have now consummated a relationship with our Korean partners, and we obviously hope to do more with them,” Alex Brierley, director of energy investments at Octopus, told Infrastructure Investor.

Brierley declined to give a possible timeframe for any other future deal with KIS.

In a statement, Octopus said this was the first “major investment in UK Renewables Obligation Certificate subsidised energy assets from Korea.”

Speaking about brownfield renewable energy assets, Brierley mentioned that these are often subsidised, granting a “relatively predictable stable return”, which makes them “attractive to institutional investors”.

“As the world looks to become decarbonised, and technology moves forward, we will see very significant investment opportunities [in the renewables market],” Brierley said.

Octopus currently holds a £2.6 billion portfolio of clean energy assets and is the largest commercial solar player in Europe. Octopus’ REIP I, also part of its renewables strategy, raised £300m and was “backed by one of the UK’s largest institutional investors”, according to the company.

KIS did not respond to a request for comment.

During the financial year 2016, the firm, a subsidiary of Korea Investment Holdings, posted a net income of 243.7 billion won ($218.9 million; €187 million) while its AUM stood at 94.7 trillion won.