German-headquartered private equity firm Aquila Capital today signalled its launch of an offshoot specialising in energy efficiency projects.
Aquila Energy Efficiency Trust seeks up to £150 million from investors, and targets net shareholder returns of up to 9.5% in ‘the medium term’.
The parent has 10GW of assets in green generation, located across Scandinavia, Spain, France, Italy and northern and eastern Europe. Its UK portfolio comprises only around 18MW of wind and PV generating assets.
Targeted to begin trading on the LSE’s main market on 2 June, the new trust will invest in Energy Efficiency applications in buildings, transport, generation and industrial sectors. Its wide remit includes energy storage, EV charging and metering technologies.
Majority or minority stakes in counter-parties are anticipated. The overall goal is to “reduce primary energy consumption & CO2 emissions and in many cases deliver economic savings and other benefits to the counterparties including improved air quality.
The trust says it will not invest in extraction projects related to fossil fuels or mining.
Roman Rosslenbroich, CEO of the parent group, said, “Energy efficiency is the “First Fuel”. It touches all parts of the economy and lies at the heart of addressing climate change”.
“In our day-to-day interactions with investors we see a substantial and continuous appetite for European energy efficiency investments which are characterized by an attractive and stable risk return profile due to largely contractually fixed cash flows and very limited exposure to fluctuations in the financial markets”.
The trust’s declared investment strategy is to base itself on long-term contracts which “generate stable, predictable cash flows”, with end users and investees benefitting from use of installed EE equipment over contract durations ranging from five to fifteen years.
The fund’s technology profile will be conservative, with, “assets …predominantly concentrated in a small number of proven technologies”.
Read Aquila’s IPO intentions here.