Fortis Investments' new Clean Energy Fund has raised EUR158 million in its first round of funding, with several institutional investors stepping up to finance onshore wind and other proven renewable energy technologies in Europe.
BNP Paribas Fortis, the parent company of Fortis Investments and a unit of the French lender BNP Paribas, provided an initial EUR50 million investment for the fund.
Commitments from Dutch pension funds Zorg en Welzijn and Grafische Bedrijven followed, along with undisclosed investors in Japan and Belgium. Peter Dickson, technical director of the fund, says that the company hopes to achieve the overall target of EUR450 million by the first quarter of 2010.
Following a trend
Fortis Investments has already become involved in wind and photovoltaic solar activities. Earlier this year, it acquired the 12.5 MW Vitry wind farm from French developer Eolfi. It has also made a wind energy investment in the UK, details of which have yet to be released, and has two commitments for solar investments in Italy and Spain. Additionally, the company is planning to focus on small-scale hydro and biomass.
Strong government legislation supporting renewable energy in many European countries is seen by many analysts as making investments more attractive. Dickson declined to comment on a targeted rate of return for investments, but says that the fund is looking at secure, risk-managed projects.
Fundraising began in September 2008, a week ahead of the collapse of US investment bank Lehman Brothers and so it is no surprise that closure of the first round was pushed back from the end of 2008 to September 2009. Despite the financial backdrop, investors' response to the Clean Energy Fund has been seen as a positive sign for those seeking to finance renewable energy investments.
"It's encouraging but of course there's a qualification," says Dickson. "Investors are more open to making investments but they are being quite selective on risk. They're not as bullish as two years ago when we saw funds doing all sorts of things in all sorts of places. People are much more selective, and want teams that can add value in the places and with the technologies in which they are investing."
And while the fund is investing in tried-and-tested renewable technologies - offshore wind is off its radar, for example - it is also expected to invest predominantly in Western Europe. "It's safe to say that the largest markets for renewable energy in Europe will be in Western Europe," notes Dickson. "While things are happening in Eastern Europe, it still remains risky, certainly from a private equity investor standpoint."
