NextEnergy Solar Fund has completed its first round of fund-raising and is set to use the £85.6 million ($144.6 million) to invest in UK solar plants.
The fund-raising was part of the company is targeting of £750 million ($1.26 billion) of assets over the next three years. Michael Bonte-Friedheim, CEO of the fund, said he expected one or two more rounds of fund-raising within the next twelve months. The fund looks only to invest in UK solar plants.
Bonte-Friedheim added, The first £85m will go along eight projects. They are a mix of 2.0, 1.6, and 1.4 renewable obligation certificate solar projects. On top of that, we are working on an incremental portfolio in excess of 200 MW. The projects are broadly distributed across the south and east of the country in the counties of Warwickshire, Cornwall, Somerset, and Northamptonshire.
Bonte-Friedheim said that the fund stood out from others in the marketplace due to its dividend and grading towards lower-risk. The fund has a dividend that pays out 5.25% in the first year, then 6.25% in the second before rising in line with inflation. According to Bonte-Friedheim, the fund has no investment or development fees, employs a lower fee structure, and has a structure in place to avoid conflicts of interest. It shares were placed at £1 ($1.68) each and will begin official trading on April 25.
Bonte-Friedham added, The fund only invests in UK solar plants. We do not do other jurisdictions because that would add risk. We also don’t do other technology such as wind because that would add risk to a portfolio. Because solar is the lowest risk, adding any other technology would not be diversifying that risk but increasing it.
The fund’s raising of capital follows its flotation on the London Stock Exchange by parent company NextEnergy Capital in January. Then, the solar farm management group planned to raise £150 million ($252 million) through shares were scheduled to begin trading in March. Bonte-Friedheim acknowledged that the fund had not raised the amount of capital it had hoped to but pointed out the similar levels of success that John Laing and The Renewable Infrastructure Group (TRIG) had experienced around the same time.
Bonte-Friedheim said, We focused on creating a product that is more attractive to investors. It seems that they are seeing that. TRIG wanted to raise £120 million ($202 million) but only managed £60 million ($101 million). John Laing raised only £90 million ($151 million). Our IPO raised more capital than TRIG and roughly the same as John Laing. Investors saw the attraction of what we bring to the table.