Capital Dynamics has a launched an Article 9 clean energy fund that will seek “environmental credits” as well as financial returns.
CE UK has a £600 million ($739 million; €678 million) target, the majority of which will be used to finance the construction of solar PV projects, offshore and onshore wind projects and batteries in the UK.
The size of the fund’s target points to an outsized opportunity set in the UK for renewable energy investments compared with other European markets. It outstrips the most recent European fund raised by Capital Dynamic’s clean energy business, Clean Energy Infrastructure Fund IX, which invests in markets including Spain and Italy and closed at €521 million in October 2022.
CE UK is classified as an Article 9 fund under the EU’s SFDR and has returns targets of between 10 and 12 percent IRR. It will also generate “environmental credits”, according to Strathclyde Pension Fund documents seen by New Private Markets. The documents do not specify whether these are carbon credits. Strathclyde is considering a £60 million investment into the fund.
CE UK will also have capacity to invest in continental Europe and Ireland, in distressed or underperforming brownfield assets, and in other clean energy technologies such as electric vehicle and grid infrastructure on an opportunistic basis.
Capital Dynamics did not respond to requests for comment before publication.
Capital Dynamics set a net zero 2050 target last year. Read New Private Markets’ interview with Bryn Gostin, the firm’s head of product development and strategy, here.