NextEnergy Capital Raises $480 Million after First Close of Fifth Solar Fund
Listen to this story:
NextEnergy Capital, the leading global solar specialist in the renewables sector, is delighted to announce the first close of its fifth investment vehicle NextPower V ESG, a flagship OECD-focused solar strategy targeting capital commitments of $1.5 billion with a $2 billion hard cap.
First close commitments to NPV ESG amounted to $480m, comprising $330m in direct commitments and $150m in co-investment allocations. Investors in NPV ESG include KLP, a German occupational pension fund, and a large Nordic pension fund. Looking forward, NPV ESG expects to welcome additional investors in its second close later this year, with several investors currently active in due diligence.
NPV ESG is a ten-year closed-ended vehicle that offers investors the opportunity to earn attractive risk-adjusted returns from investments in solar PV and energy storage infrastructure assets located in OECD geographies, targeting mid double-digit returns while contributing to the decarbonisation of the power generation sector, reducing electricity prices and increasing energy security. The fund’s projects will be backed by long-term stable cash flows, backed by robust, credit-worthy PPAs leveraging the team’s OECD-based PPA expertise, as well as regulated revenues.
The fund’s primary geographic targets include Europe, North America, and Chile, where NextEnergy Capital currently manages an extensive solar PV infrastructure asset portfolio. NEC has identified a pipeline of investment opportunities for NPV ESG spanning over 14GW in these geographies.
NPV ESG is classified as an Article 9 Fund under the EU SFDR, and at its investment ceiling is forecast to produce enough clean energy to power the equivalent of up to 750,000 households per year and avoid an estimated fossil fuel consumption of up to 150 million m3 of natural gas per year.
See related article: NextEnergy Capital Launches $1.5 Billion Solar Fund
The fund follows NEC’s previous OECD solar strategy, NPIII ESG, which reached its final close in January 2022, raising c.$900m in total commitments, including an SMA. Since its launch, NPIII ESG has acquired 149 individual assets across 23 solar portfolios and one battery portfolio for an installed capacity of c.1.9GW.
NEC has established itself as a leader in the international solar sector, with a track record of investments in nearly 400 utility-scale solar assets across OECD markets since 2007. The NextEnergy Group is exclusively focused on solar and complementary technologies such as battery storage, providing significant synergistic benefits to investors through its expertise across the entire solar value chain, from investment management (NEC), operating asset management (WiseEnergy), and development (Starlight).
Michael Bonte-Friedheim, CEO and Founding Partner of NextEnergy Group, said:
“NPV ESG’s first close represents an important milestone as the fund secures strong investor support from the get-go. Utility-scale solar represents a very large investment opportunity set globally, with total spending in 2023 forecast to reach $382bn, and we aim to continue our leadership role in the sector.
We leverage our focus, experience and expertise in the solar infrastructure sector to secure and invest in attractive solar projects and portfolios and generate superior investor outcomes.
NPV ESG’s launch follows hot on the heels of our successful UK-focused NextPower UK ESG fund, which within six months of launch in August 2022 had secured commitments 20% above its target size of £500m, has committed most of its capital and is currently heading for further investment and fundraising successes.
NPV ESG will leverage our existing market presence in its target geographies, developed through the large number of investments made by its predecessor fund NextPower IIII ESG. I expect our dedicated local teams with experience in these markets to deploy capital from the fund rapidly in the identified opportunities from our pipeline.
I am excited to continue our global fundraising efforts and look forward to announcing the second close of NPV ESG and its first investments shortly.”
Shane Swords, NextEnergy Capital Managing Director and Head of Investor Relations, said:
“The NextEnergy Capital platform continues to experience positive momentum with this strong close. I am always elated by the support of existing investors that stick with us from strategy to strategy and new investors that join us. I think that with our exemplary track record, length of experience in solar and the solar opportunity set out there, this fund creates a fantastic opportunity for investors looking for strong and stable renewable energy returns.
This first close sends a strong signal to the market that, despite the current environment, investors continue to seek a specialist investment manager with a successful track record of delivery, deployment and superior return generation.”