Zouk reaches £150m for government-backed EV infra fund

The firm is planning to reach its £400m target later this year, with half of the fund being provided by the UK government.

Zouk Capital has reached a second close on its UK electric vehicle Charging Infrastructure Investment Fund, bringing deployable commitments to £150 million ($184 million; €169.7 million).

The firm has added three new investors to the fund, including the Church Commissioners for England pension fund, in addition to what George Ridd, partner at Zouk, described as “strategic” investors.

The investors’ £40 million commitments were matched by the UK government, bringing the total second close fundraising to £80 million. The other £70 million was raised from Abu Dhabi-based clean energy group Masdar and the UK Treasury. Investments are being matched by the government up to £200 million and Ridd told Infrastructure Investor that Zouk expects to close at its £400 million target by the end of the year.

Zouk was selected by the Treasury in February last year to manage the fund on behalf of the UK government and is designed to scale up the country’s EV charging infrastructure capabilities.

“Investors are attracted by the opportunity to be part of a mega-trend as the world moves away from fossil-fuelled vehicles,” said Ridd. “Other groups which have more of a strategic interest in the evolution of transportation are looking to dip their toes in the water to see how the charging infrastructure and their business models play out over time.”

Business models for the sector have been questioned in the past, with S&P Global Ratings stating last year that they are “unprofitable and therefore unproven”. However, Ridd maintained that Zouk was looking long-term as it pursues what it describes as “commercial” return.

“It’s an infrastructure asset and it’s about creating a long-term position,” he added. “You’re clearly building in anticipation of the growth of that market. At the moment, there are circa 300,000 EV cars on the road today but by 2030 this could be anywhere between 6 and 12 million. It’s very much a market that would be characterised by early-mover advantage  in terms of good locations, grid capacity, the ability to scale the assets. You need to do that now. If you wait too long, those good sites would have gone.”

The fund’s first investment was made last year, taking a stake in Instavolt, a rapid charging company which Zouk already owned part of through its €220 million Renewable Energy & Environmental Infrastructure Fund II, closed in 2014. A second deal has been agreed and is due to be announced shortly, which Ridd said is focused on on-street charging points.

In addition to its support for the Charging Infrastructure Fund, the UK government also announced  a further £500 million for charging infrastructure in the Budget, although this is believed to be for strengthening grid connections and not areas of activity for the fund.