Investment firms APG Asset Management and Aquila Capital have formed a partnership to invest an anticipated US$678.8 million into the development and acquisition of European hydroelectric power plants.
Holland-based APG said it has commissioned Germany’s Aquila Capital to “establish an investment vehicle dedicated to hydropower infrastructure”, with APG contributing about $340 million to the venture. The remainder of the projected investment will come in the form of debt financing.
“Hydropower is the most efficient of all main energy sources and ticks the right boxes for us in terms of the risk-return profile and the high cash flow visibility, as well as its strong, sustainable profile,” APG Managing Director of Global Real Estate & Infrastructure Patrick Kanters said. “There are relatively few companies with the expertise and industry networks to access the best opportunities in the sector, which is why we have teamed up with Aquila Capital.”
Aquila Capital will provide operational management of the hydropower assets and portfolio management services for the partnership.
“These investments are supported by macroeconomic fundamentals and offer the potential to generate above average returns on a sustainable basis that are uncorrelated with mainstream financial markets,” Aquila Capital CEO and co-founder Roman Rosslenbroich said. “APG is similarly recognized as a global leader in investing in these areas, so we are particularly pleased to be partnering with them in this venture, which should give a strong boost to the hydropower renewable energy industry in Europe.”
The companies said European investment yields on hydropower projects are in the high single-digits depending on factors including the location of the plants, electricity prices, construction and regulatory risks involved.
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