The fund is expected to support more than €1.3bn in renewable power projects in total, generating enough power to light more than 500,000 homes, according to HgCapital.
Tom Murley, a director at HgCapital, said that the cover on the fund was €250m with a hard cap of €300m when pre-marketing began in mid 2005. Formal marketing kicked off in January of last year, with a €147m first close in June. No placement agent was used for the oversubscribed fundraising, said Murley.
Fifteen limited partners committed to the fund in total, of which about 30% were based in the US. Named limited partners include Dutch pension fund
“No-one invested in it because it was green,” says Murley. “If it ticked a box for socially conscious investing, that was a bonus, but they did it because they thought it was a good investment, and because of the strategy, track record and the team.”
HgCapital began building its energy investment team in early 2004 with the appointment of Murley, previously co-head of Allianz Private Equity’s renewable energy team, and before that with the EIF Group, established in 1987 as the first private equity fund manager for power generation. The team currently comprises four investment professionals, with the recruitment of two to three more imminent, according to Murley.
HgCapital has made six wind farm investments, including Tir Mostyn in North Wales, Sorne Wind in Donegal, Ireland, four wind farms in Northern France and Wind Direct, an operator of onsite industrial wind farms.
“The previous investments were made from going to a limited number of existing clients and getting their backing to seed investments into a fund that would bridge the full fund in which they became limited partners,” said Murley.
“Lots of firms have been looking at this sector for a while, and we could have done it sooner, but HgCapital always takes a measured approach,” he said.
“We could have gone to market with the fund back in 2002 or 2003 but we wanted to prove our team and our investment strategy so that we had deals done and could kick the tyres when we finally did go out with the marketing.”
Murley added that the fund would focus on key markets in Western Europe, including the British Isles, Iberia, France, Germany and Italy, which account for about 80% of the renewable energy market.