London-based investment company Quercus Assets Selection is to launch two new renewable energy infrastructure funds.
Quercus is looking to raise a minimum combined target of €500m ($548m) across the three funds, which is to be invested in connected wind and solar plants in Italy, as well as in other renewable technologies throughout Europe.
The Quercus Italian PV fund has a fundraising target of €150m and is focused on Italy with the aim of creating a high quality portfolio of photovoltaic plants. The Quercus Italian Wind fund also has a target of €150m and will invest in existing Italian windpower plants over the next two years to build a portfolio generating 300 MW.
The two new funds will sit alongside the existing Quercus European Renewables fund, which invests in multi-technology assets with a minimum target of €200m to be invested in production facilities of various renewable energy assets across Europe.
The funds will have a long-term investment horizon of a minimum of 10 years and a targeted internal rate of return per annum of 8-10 per cent, rising to 9-11 per cent in the case of Quercus Italian Wind fund.
In a statement, Quercus said that investment in renewable infrastructure “provides stable, long-term returns with a low risk profile that generates sustainable and predictable cash flows de-correlated from the fluctuations of financial markets”.
It said that the funds “represent an ideal investment for long-term institutional investors, whose investment style is characterized by risk aversion and the need for capital protection”.
Quercus explained that the Italian market is particularly attractive because of its “stable policy with regard to incentives and its focus on renewable sources which are given grid priority”.
The Italian market is the fourth largest in the world for installed PV capacity and ninth for wind power.
Quercus said that “the high degree of asset fragmentation in this large market presents significant opportunities for consolidation for players capable of financing, sourcing and executing on such opportunities”.
Quercus chairman Vito Gamberale said: “Today, Italian renewables play a key role that I define with three Ps: predominant, prevalent and preferential. The Italian market remains extremely fragmented and presents significant opportunity for consolidation. Quercus is looking to capitalize on this opportunity to become a medium to large-scale operator of renewable energy plants in Italy.”