Egyptian investment bank EFG Hermes has reached a $200 million first close on its first blind-pool fund targeting energy transition assets.
Investing via its Abu Dhabi and London-based Vortex Energy platform, the firm has secured initial commitments from Abu Dhabi sovereign institutional investors and family offices. Vortex Energy IV has a target of $700 million and will invest with a focus on Europe, but also in North America, Australia and Latin America. It is targeting assets in solar and offshore wind, distributed energy, storage, EV charging infrastructure and supply and demand-side energy services. It is targeting a net IRR of 15 percent, Karim Moussa, head of private equity at EFG Hermes and chief executive of Vortex Energy, told affiliate title Infrastructure Investor.
Vortex Energy has previously invested in European renewables on a deal-by-deal basis, such as its 2016 acquisition of a 49 percent stake in a 664MW European wind portfolio in 2016 and a 365MW UK solar portfolio in 2017, reports affiliate title Infrastructure Investor (registration or subscription required). Moussa said the prior investments to Vortex Energy IV have netted the group a net IRR of 13 percent and a money multiple of 1.4x, and Moussa feels this enables Vortex to enter the fundraising market.
“A blind pool helps us transact better and be quicker in the market when we need to be,” he said. “If we would have the luxury of doing a blind pool for Vortex I, I would have done it. We didn’t have a track record. It’s a natural evolution. We built a track record, gained experience and now we raise commitments.”
Vortex’s prior investments were predominantly in operational assets and in those benefitting from various subsidy regimes, but Moussa said the shifts in the sector meant an alteration to Vortex’s approach.
“Vortex IV is much more tailored to today’s renewable energy themes as opposed to what we had before,” he explained. “The industry takes more market risk and merchant exposure and that means more of a private equity approach as opposed to the classic infrastructure approach applied before.”