Melbourne-based Impact Investment Group (IIG) has launched a US$100 million Solar Income Fund with seed assets under construction. The fund has exclusive rights to acquire approximately US$60 million of Australian solar infrastructure projects, expected to provide roughly 9,000 homes with power.
The fund is expected to deliver investors stable, long-term cash returns by investing in commercial and utility-scale Australian solar farms secured by long term off-take arrangements to high credit quality counterparties including local and state governments. The fund has a target to deliver investors a pre-tax Internal Rate of Return of approximately 10%. The investment is climate positive with long-term health and environment benefits.
The fund is led by renewable energy industry expert and IIG Head of Renewable Energy Infrastructure Lane Crockett, and overseen by an independent board chaired by Ross Garnaut AO. It aims to deliver attractive and predictable financial returns to investors, while taking a substantial step on Australia’s journey towards a low carbon future.
During the life of the fund the pool of assets are expected to reduce carbon emissions by around 1.2 million tonnes over the course of the fund’s life, and subsequently protect roughly 16,000 Australians “from pollution-related diseases”.
IIG intends to deliver the seed assets through to operational completion and provide the Fund an option to acquire the assets, subject to approval by the independent Board.
The seed assets include the Karratha Solar Farm located in Western Australia and the Mount Majura and Williamsdale solar farms located in the Australian Capital Territory. The fund will only acquire fully operational solar farms and will not take any development or construction risk. The Fund’s assets will have long-term contracted or regulated off-take arrangements with Australian governments and/or investment-grade commercial counterparties, and will typically range between 1 MW - 30 MW in size.
This launch marks a new chapter for IIG following the success of its unlisted commercial real estate investments over recent years. Since establishment in 2013, IIG has expanded its investment focus to include renewable energy infrastructure investments with similar characteristics to IIG’s unlisted real estate impact investments.
IIG Solar Income Fund Chair Ross Garnaut AO commented:
“This fund aims to provide attractive and stable returns to investors with positive social and environmental benefits. The IIG Solar Income Fund comes at a crucial time for the renewables sector. Bold steps by investors like IIG will support Australia’s utilization of its opportunity to be a superpower of the low carbon world economy.”
IIG Chief Executive Officer Chris Lock said:
“We are enormously proud to be launching a renewable infrastructure fund of this magnitude, with an authority like Ross Garnaut AO and industry veteran Lane Crockett at the helm, and with the quality of pipeline assets that we have. This is a good news story all round. Our mandate is to bring product to the Australian market which blends financial returns with positive impact.”