Copenhagen Infrastructure Partnersʼ new Green Credit Fund is providing a new source of financing for the renewable energy sector. It enables companies to develop their businesses while providing CIP investors with access to a different part of the capital structure in renewable energy projects, compared to its other funds.
The private credit market is expanding globally, and renewable energy is no exception.
Significant credit is needed to support the rapid expansion of renewables, and new ways of financing are helping to expand the pool of funds available to developers. Copenhagen Infrastructure Partners (CIP) is leading the way with its Copenhagen Infrastructure Green Credit Fund I (CI GCF I), which was launched in February 2022 with EUR 320 million of commitments and closed fund raising in August 2023 with about EUR 1 billion of commitments.
You have a business with talented people and a portfolio of projects which are ready for construction projects. You can organise some senior financing and some equity, but it may only add up to say 80% of what you need. So then you have a tough choice – you can sell projects, sell equity or sell your whole business. Now, CIP has the ability to come in and fill that gap and allow people to grow their own businesses and remain owners
It is CIP’s first debt fund and provides private project finance debt with subordinated risk characteristics supporting renewable energy projects globally. It is performing well and is about 40% committed
We’ve built the platform and the team specifically to be able to address the market opportunity while drawing on the resources and expertise that sit within the broader CIP organisation. We have executed four transactions to date including two large transactions with co-investors from our LP base – something we expect to see more of in the future. It has really been an excellent start in quite choppy markets, considering increases in interest rates and inflation. That means that in fixed income, investors will pick someone they trust and it’s a vote of confidence in our ability to deliver
CI GCF I’s focus is on green- and brownfield projects in wind, solar PV, biomass, storage and transmission, assets, and geographically on Europe, North America and selective jurisdictions in Asia Pacific. The fund provides investors access to an asset class with substantial growth momentum, attractive risk-adjusted returns and low correlation to other asset classes. It is mainly concerned with direct investments, but also has ability to do risk sharing transactions.
We saw an opportunity to do three things with a credit strategy. The first is to provide our investors with a lower risk product, to which CIP is adding a significant amount of value. Then we aim to improve the ratio between risk and return by investing in projects and businesses where CIP has a significant amount of expertise and experience.
Last but not least, it opens up another avenue to support the green transition. CIP aims to be responsible, as a single company, for saving 1% of global CO2 emissions. We’re not going to build all the capacity in the world – and this is a way in which we can support others to do that, while offering attractive investments for our limited partners
The global clean energy enterprise TagEnergy announced the closing of a dual currency (AUD and EUR) green bond in June, totalling a maximum of EUR 570 million with CIP and the Singaporean institutional investor GIC as investors.
The issuance will be instrumental in supporting the growth of TagEnergy’s renewable energy portfolio of onshore wind, battery energy storage systems (BESS) and solar PV assets in the UK, Europe and Australia.
TagEnergy, founded in 2019, has successfully achieved financial close on several renewable energy projects including the first stage of the 1.3 GW Golden Plains Wind Farm onshore wind mega-project in Victoria, Australia as well as four BESS facilities across the UK totalling 169 MW.
The first tranche of the green bond will add to existing funding sources for the construction of the first stage of Golden Plains, with the remaining up to EUR 300 million follow on tranche dedicated to TagEnergy’s other global renewable assets. It will play a major part in the company’s aim to put over 4 GW of onshore wind and other renewable energy projects into commercial operation in several OECD countries
This partnership shows how green credit works in practice. TagEnergy has a strong management team and a robust portfolio of projects, combined with a really exciting pipeline. Investment from Copenhagen Infrastructure Green Credit Fund I and GIC will help to accelerate TagEnergy’s impressive work, while allowing CIP to make a further meaningful contribution to the green transition
Across the world CIP is engaged in green energy and infrastructure projects. Here are a few of them.