Quercus Assets Selection, which specialises in infrastructure investments with a focus on renewable energy, is to launch two new renewable energy infrastructure funds, bringing the total number of funds in its portfolio to five.
The launch of the two new funds will complement the recently launched Quercus European Renewables fund to maximise the portfolio’s risk/return profile through a meticulous strategy of diversification.
Quercus is looking to raise a minimum combined target of EUR500 million 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.
More specifically, the Quercus Italian PV fund has a fundraising target of EUR150 million and is focused geographically on Italy with the aim of creating a high quality portfolio of photovoltaic plants.
The Quercus Italian Wind fund has a fundraising target of EUR150 million and will invest in existing Italian wind plants over the next two years to build a portfolio generating 300MW.
The Quercus European Renewables fund invests in multi-technology assets with a minimum target of EUR200 million 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 (IRR) per annum of 8-10%, rising to 9-11% in the case of Quercus Italian Wind fund.
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. The funds therefore represent an ideal investment for long-term institutional investors, whose investment style is characterized by risk aversion and the need for capital protection.
The three new Quercus funds facilitate participation in an attractive renewable energy marketplace that continues to offer significant investment opportunities. It is estimated that the proportion of global electricity generated from renewable sources will double in the next 25 years, reaching 46% of all electricity produced worldwide in 2040 compared to 23% today.
In this global scenario, the Italian market is particularly attractive, given 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 (18.3 GW) and 9th for wind power (8.7 GW). 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.
Vito Gamberale, Chairman of Quercus, says: “Today, Italian renewables play a key role that I define with 3Ps: 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. Our strategy is clear, our goals are achievable and I look forward to contributing to the success of our new funds at Quercus.”
Diego Biasi, co-founder and CEO of Quercus, adds: “We look forward to further building on our established track record through the launch of two new funds. In addition to generating attractive returns de-correlated from the fluctuations of financial markets, these projects offer a safeguard from market shocks and provide capital protection as well as stable, long-term cash flows. Quercus funds are therefore an ideal investment for pension funds, foundations, banks, and qualified investors. Our knowledge of the market means that we can rapidly source and identify the best opportunities in order to optimise the asset allocation of the portfolio."