NextEnergy Solar invests in private sister fund – NextEnergy Solar (NESF) has invested $50m into NextPower III LP (NPIII – a private ESG solar infrastructure fund, also managed by NextEnergy Capital) and a commitment to a new revolving credit facility of £100m. The investment will represent approximately 3.5% of NESF’s GAV as at 31 March 2021 and it will be funded by the new revolving credit facility.
NPIII was established in 2018 and invests in solar infrastructure projects primarily in OECD countries. It currently owns a solar asset portfolio of 394MW, of which 245MW are operational, with a further 453MW in acquisition under exclusivity. The fund provides NESF with an opportunity to efficiently access, inter alia, an established portfolio of operational and in-construction international assets. The investment will also provide NESF with additional, off-market opportunities to co-invest with NPIII. This will involve NESF taking direct equity stakes in selected investment targets sourced by NPIII at attractive terms (on a no-fee, no-carry basis).
Meanwhile, the revolving credit facility was secured on attractive terms with lenders NatWest and AIB. It amounts to £100m (£75m committed + £25m accordion) with a 3-year duration and increases NESF’s overall RCF facilities to £165m (not including the accordion) of which £54m is currently drawn. This provides NESF with cost-efficient funding to progress its investment strategy pipeline, with an agreed margin of 120bps over sterling overnight index average.
NPIII Investment Costs
NextEnergy Capital has agreed to rebate back to NESF its full investment management fee relating to NESF’s commitment to NPIII. As a result, from the day of signing, NESF will reduce the basis upon which it calculates the investment management fees due to its manager by subtracting from the relevant NAV an amount equivalent to $50m (during the NPIII investment period, and then the actual amount invested, after the end of it).
NESF will also adopt a “look-through” approach and consider its pro-rata share of NPIII in reporting on its portfolio with regards to gearing, geographical distribution and other investment limits.
Statement from Kevin Lyon, chair of NextEnergy Solar
“NESF’s investment into NPIII is an exciting opportunity to immediately add international diversification, incremental growth and an attractive return profile to our portfolio. The board believes this commitment fits NESF’s investment objective well and the future co-investment opportunities can offer a unique, return-enhancing portfolio benefit. NPIII’s strong track record since its inception, its high-profile investor base and award-winning status provide us with further conviction around this investment. It also contributes to our portfolio’s geographic diversification and risk mitigation with respect to individual markets’ power prices. We look forward to updating shareholders further as our investment is deployed. The Board believes the new RCF to fund this commitment and further investments is the most cost-efficient funding strategy.”
NESF : NextEnergy Solar invests in private sister fund