NextEnergy Capital Announces Record Fundraise of $896 Million for NextPower III ESG

NextEnergy Capital (“NEC”), is delighted to announce its final close for NextPower III ESG (“NPIII ESG”), bringing the total capital raised to $896 million, including an SMA.  Including co-investments closed to date, the total capital pool for its investment strategy exceeds $905 million.  The capital raised is comfortably above the target of $750m and makes this NEC’s largest private fund to date.

NPIII ESG focuses on the international solar infrastructure sector, principally targeting projects in carefully selected OECD countries, including the US, Portugal, Spain, Chile, and Poland.  It is the largest OECD-focused solar infrastructure fund globally.  The portfolio currently has an installed capacity of 742MW spread across 23 projects and 2 portfolios, having assessed in excess of 35GW, while the fund has a further 521MW in exclusivity and 3GW under review.  NPIII ESG’s progress demonstrates NEC’s ability to identify investment opportunities, generate additional value-add, and selectively acquire attractive assets for the fund.

Capital was committed by a top-tier and diversified investor base, including pension funds, insurance companies, fund-of-funds and family offices, demonstrating the strong demand from investors for solar PV and the endorsement of NEC as a highly specialised and experienced investment manager.  NPIII ESG’s investor base comes from 9 countries.  Fundraising was largely conducted during the restrictions of the global pandemic, necessitating creative solutions to the due diligence process, including “virtual” site visits and remote meetings with senior management.

NPIII ESG has already won industry awards, ranging from the prestigious Environmental Finance ‘Renewables Fund of the Year’ at the 2020 Sustainable Investment Awards, and NEC’s in-house asset manager, WiseEnergy, winning ‘Best Solar Asset Manager’ at the 2021 awards.

NPIII ESG is a fund that provides a positive social and environmental impact to the countries into which it is and will be invested.  It is committed to achieving the highest standards of ESG reporting in alignment with both the EU Taxonomy and Sustainable Finance Disclosure Regulation (“SFDR”).  NPIII ESG benefits from NEC’s sustainability framework which is integrated into the core structure of the fund forming a crucial part of the investment process.  When fully invested across an installed capacity of circa 2.5GW, NPIII ESG can expect to deliver estimated annual avoided emissions of circa 2 million tCO2e each year which, on a conservative basis, is the equivalent to providing energy for more than circa 1.3 million homes per year.

This fundraise represents another milestone in a productive period for NEC, having recently launched a subsidy-free UK-focused solar infrastructure fund, NextPower UK ESG, with the UK Infrastructure Bank planning to invest up to £250m, half of the fund total target size alongside the private sector. Alongside this, NEC has just divested its entire NextPower II solar portfolio in Italy, a 2016 vintage vehicle, was divested in January 2022 and generated net IRRs to its investors in excess of 25%.

Michael Bonte-Friedheim, Group CEO and Founding Partner, added:
“We are thrilled to announce the final close of NPIII ESG, having secured total capital commitments well above our target of $750 million from new and existing investors.  There was an enormous amount of investor interest in the fund as investors’ appetite towards solar, ESG and sustainability funds continued to grow.  I am looking forward to the continued development of the fund’s portfolio given the depth and quality of its current pipeline.
This is an exciting time for NEC as we continue to demonstrate to investors our strong track record as the preeminent investment manager in the international solar sector and continue to identify attractive investment opportunities in the sector for investors to access.”

Shane Swords, Managing Director and Head of Investor Relations, said:
“We are delighted to announce this record fundraise for the Group and I personally want to extend our gratitude to our investors for their continued support. The fundraising total is made even more momentous given the backdrop of the global pandemic which meant that the majority of our investor due diligence and onboarding was virtual, so it is a real testament to the team that we successfully fundraised and reassured investors during this unprecedented time.
The solar industry continues to show enormous potential and I’m looking forward to announcing further capital commitments for our private funds, notably NextPower UK ESG, in the coming months.”

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