Semi-Liquid Energy Transition Fund allows flexible exposure to private markets
Fund to invest in large-scale wind farms, solar parks, and other green infrastructure
The strategy is targeting gross returns of more than 10%
January 19, 2024 (Preqin News) – Schroders Greencoat, Schroders Capital’s infrastructure and energy transition arm, has added an infrastructure fund to its series of semi-liquid funds aiming to offer greater private markets access to smaller investors.
The Schroders Capital Semi-Liquid Energy Transition Fund – its first infrastructure and sixth semi-liquid fund –plans to capitalize on the renewable energy transition by investing in large-scale wind farms and solar parks, as well as other forms of green infrastructure. The firm says it will deploy funds across the US and Europe, and aims to provide over 10% in gross returns.
Semi-liquid funds allow investors exposure to private markets but offer more liquidity options than investing in closed-end funds that traditionally provide access to assets such as private equity, private debt, and infrastructure.
‘Achieving net zero by 2050 requires significant change and investment into energy infrastructure,’ Duncan Hale, Portfolio Manager at Schroders Greencoat, said. ‘This offers a great opportunity for investors to benefit from an innovative fund structure that supports their ability to access energy transition assets that can not only offer attractive returns, but also take advantage of a risk profile that delivers strong diversification characteristics for investors’ portfolios.’
In 2022, Schroders, which has $86.7bn of assets under management (AUM), completed their acquisition of majority shareholding in infrastructure manager Greencoat Capital. The Schroders semi-liquid series of funds had an AUM of $1.4bn as of June 2023.
The global shift toward more secure and cleaner energy supplies is expected to drive strong demand for energy infrastructure projects in the coming decades. According to the Preqin 2024 Global Report: Infrastructure, ‘tailwinds from the energy transition will continue to underpin the long-term growth of unlisted infrastructure’.
In addition to wind and solar, Schroders’ latest fund also plans to invest in clean hydrogen, battery storage, district heating, charging infrastructure, power grids, and carbon capture sectors. According to the report, these areas are expected to seek increasing levels of capital as the move away from fossil fuels develops.
‘Energy storage, a once niche sector, has the potential to drive the ongoing penetration of renewables into energy generation, as well as feed existing assets for secondary investments. Grid-scale batteries are scaling with technological innovation, holding promise for increased grid resilience. The decarbonization of energy generation is as sure a trend as any investor could hope for,’ Alex Murray, Head of Real Assets, Research Insights, said.
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.