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World’s largest dam operator backs CGN renewables fund

The Chinese nuclear giant hopes to achieve a $724m final close on the vehicle in the first quarter of next year.

Three Gorges Capital has pledged 100 million yuan ($14.5 million; €13.6 million) to CGN Capital Partners Infrastructure Fund III, allowing the vehicle to achieve a third close on 3.3 billion yuan. 

The fund, launched in 2013, hit its first close on 1.9 billion yuan in May 2015. It targets operating assets in China, with a particular focus on wind, hydro and solar power. 

Raymond Fung, the fund’s chief investment officer, told Infrastructure Investor in a phone interview that he expected another three to four investors to commit to CGN III before the fund’s fourth close, which would likely be the final one. 

The team has been in talks with European investors and is finalising a commitment with one of them, Fung said without identifying the LP. He expected the fund, which has a 5 billion yuan target, to hold its next close in the first quarter of 2017. 

The vehicle is backed by a group of Chinese institutional investors including Industrial and Commercial Bank of China, Agricultural Bank of China, Post Savings Bank of China, China Cinda Asset Management, China Huarong Asset Management and People’s Insurance Company of China. 

CGN hopes that the financial endorsement provided by Three Gorges Capital, a unit of the Chinese utility that controls the world’s largest dam, will also help it on business and technical matters. Both companies count among the largest renewable energy players in the country. 

Since first close, the fund has committed to invest a combined 1.4 billion yuan in 440MW of renewable energy assets. The portfolio includes about 300MW of wind and 100MW of utility-scale solar power, Fung said. 

He added that with Three Gorges’ investment and support, the fund was looking to deploy capital in small- to medium-sized hydro projects but has yet to identify suitable investments.