Australian Ethical and Infradebt launch infrastructure debt fund
Ludovic Theau
Leading ethical fund manager Australian Ethical has partnered with renewable and infrastructure debt specialist Infradebt to launch an infrastructure debt fund that will provide capital for key Australian projects spanning renewable energy, social infrastructure, and property projects with a social or environmental benefit.
Investors in the Fund will have direct visibility of the amount of capital allocated to underlying projects, and the environmental and social benefits each achieves. Infradebt, is already a leading active participant in Australia’s energy transition, having funded more than 40 renewables projects to date.
Financing renewable energy infrastructure projects in solar, wind, hydro, geothermal power generation and energy storage will be critical to Australia’s transition.
Some of the Fund’s infrastructure investments include loans to the Yarranlea Solar Farm, to implement solar and battery projects in remote communities, and standalone battery projects such as the Genex Bouldercombe in Queensland, which will allow a predictable supply of electricity to the grid at peak times of demand.
Chief Investment Officer Ludovic Theau says Australian Ethical’s Infrastructure Debt Fund will be at the forefront of capital deployment that will support Australia’s renewable energy transition.
“We estimate that debt capital will provide 50-60% of the total capital expenditure that’s required to meet Australia’s renewable energy transition targets. Given Australia is aiming to increase its renewable energy generation from 39% today to 82% by 2030, Australian Ethical considers its expansion into infrastructure debt as an important growth opportunity that will serve a dual purpose – of delivering good risk-adjusted returns and contribute towards meeting these targets.
“Australian Ethical has doubled its funds under management in the past three years; product innovation that demonstrates our ethical investing pedigree, and offers investors opportunities for diversification, is an important part of our growth strategy. This partnership with Infradebt, also a leader in its field, allows us to bolster our investment capabilities by bringing in-depth expertise across new asset classes,” said Mr Theau.
Infradebt Investment Director and Co-Founder Alex Ramsey said, “we’re pleased to be partnering with Australian Ethical on a product that will be integral to building Australia’s green transition. The energy transition is of paramount importance to our community, it will be complicated and challenging, and the Fund will allow investors to access the requisite investment capability to participate and make a meaningful contribution.
“By sitting higher in the capital structure, Infrastructure debt tends to offer investors stable and predictable cash flow, and diversification away from more commonly held equity portfolios. It also offers good risk-adjusted returns, and portfolio protection that can work to help hedge against market volatility and inflation, all while contributing positive social and environmental outcomes and achieving financial returns.” said Mr Ramsey.
