German investment manager KGAL announced today the launch of KGAL ESPF 5, a new impact fund focused on European greenfield renewable energy assets. According to KGAL, the impact fund is one of the first to be launched under Article 9 of the Sustainable Finance Disclosure Regulation (SFDR), signaling compliance with the highest standards of sustainability.

Christian Schulte Eistrup, head of KGAL’s international institutional business, said:

“For investors, sustainability and impact measurement are increasingly essential, and we at KGAL can fully relate to this as sustainability aspects are an integral part of our business and risk strategy. That is why we are incredibly proud to launch one of the first renewable Impact Funds under Article 9, with sustainability investment being first and foremost, in response to investor demand.”

The fund aims to achieve a target return (net IRR) of 7-9 percent over its 10-year term.

Renewable energy projects targeted by the fund will include photovoltaics, onshore and offshore wind power, and hydropower, with investments in other renewable energy generation and storage technologies well as grid infrastructure considered as well. The strategy will focus on EU-27 and the EFTA member states.

Florian Martin, Managing Director and head of KGAL’s client business, said:

“We place huge importance on the decarbonisation of the European economy both from a corporate and an investment perspective. For example, based on our efforts to meet various climate change targets, our renewables portfolio supplied almost 1.7 million people with green energy by the end of 2020. And we will not stop there as we will continue to play our part to decarbonise society and ultimately protect our planet.”

According to the company, the decision to launch the new fund is in response to the increasing institutional demand the company has experienced since the launch of its ESPF series, and a robust deal pipeline. KGAL’s ESPF 4 fund closed at the end of 2019 with €750 million in equity commitments, over 90% of which is already contractually committed. 

KGAL stated that the fund aims to achieve an target return of 7-9% over its 10-year term.

Michael Ebner, Managing Director and Head of Sustainable Infrastructure at KGAL, said:

“The European investment market for renewable power generation offers immense growth and diversification potential. We are very well placed to take advantage of this opportunity based on our proven track record in renewables. We entered this space in 2003, which makes us one of the pioneers of the energy transition and have acquired over 150 photovoltaic plants, wind farms and hydroelectric power plants on behalf of our clients since then – and to date our total investments amount to more than EUR 3.2 billion across ten European countries”

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