Macquarie taps renewables trend with $2 billion infrastructure fund

By Simon Jessop

LONDON (Reuters) – Macquarie, the world’s largest infrastructure investor, has raised 1.6 billion euros ($1.93 billion) for its second global renewables fund, driven by strong demand from institutional investors in Britain and Germany.

Countries and companies are seeking to increase their usage of renewable energy to lower carbon emissions and fight climate change. At the same time, record low interest rates have crimped fixed income returns and boosted the allure of alternative assets.

Macquarie Infrastructure and Real Assets (MIRA), manager of the fund, said it had drawn investment from 32 institutions, including pension schemes, insurers and sovereign wealth funds, helping it exceed a minimum target of 1 billion euros.

While Europe-based investors contributed most of the capital – German and British investors accounting for 30% each – the fund, Macquarie Green Investment Group Renewable Energy Fund 2, also attracted interest from Asia Pacific and North America.

It will target wind and solar projects in Western Europe, the United States, Canada, Mexico, Japan, Taiwan, Australia and New Zealand.

“In the geographies this particular fund is focused on, there’s over 300 gigawatts of additional capacity required in the next five years,” Leigh Harrison, Head of MIRA EMEA, told Reuters.

While the push by countries to meet the terms of the Paris climate accord was a big driver of demand, many were also looking to renewables projects to help Build Back Better from the economic ravages of the COVID-19 pandemic.

British pension scheme Border to Coast, which invests 45 billion pounds ($62.08 billion) on behalf of local government workers, pledged 101 million euros to the new Macquarie fund, which has a projected life-span of 25 years.

“Climate Change is one of the largest risks facing investors – and so investing in assets that recognise this risk and help play a part in the solution is a natural fit for us,” Daniel Booth, the scheme’s chief investment officer, told Reuters.

The decision to launch a second renewables infrastructure fund comes three years after Macquarie took over the running of its predecessor through the 2.3 billion pound acquisition of the Green Investment Bank from the British government.

While that fund, Macquarie Green Investment Group Renewable Energy Fund 1, was dedicated to offshore wind in Britain, the new fund’s broader remit has already resulted in two investments: a 10% stake in the 576 MW Gwynt y Môr Offshore Wind Farm in Britain and a 50% stake in a 268 MW U.S.-focused portfolio of residential rooftop solar projects

($1 = 0.8307 euros)

($1 = 0.7248 pounds)

(Reporting by Simon Jessop; editing by Barbara Lewis)