Nordrheinische Ärzteversorgung (NAEV), the German doctors’ pension scheme, has invested in Prime Capital Asset Management’s Prime Green Energy Infrastructure Fund.
The investment fund, which at the time of the first closing reached €202m, will deploy the capital in energy infrastructure projects in the Nordics, primarily Sweden, Norway, Finland. Other European countries can follow subject to investors’ approval, the firm said.
Prime Capital is targeting a total volume of €500m for the infrastructure fund, with a final closing expected in Q2 2021. The fund will have a life span of 10 years plus an extension option up to a maximum of two consecutive two-year periods, it said.
The firm opted for Scandinavia because onshore wind power is the most cost-efficient technology for electricity generation in the region, which offers a low level of Levelized Cost of Electricity, or LCOE, in Europe, it added.
The investment strategy is based on early access to projects, securing good wind sites, focusing on technology and support for developers to make the projects commercially viable and attractive.
Projects in the Nordics can achieve profitability without receiving subsidies from the governments due to lower costs to generate electricity. Prime Capital has already identified three investment projects in Sweden and Norway.
Werner Goricki, chief investment officer at Prime Capital, said: “We want to satisfy the growing appetite of investors that look for sustainable investments, attractive, risk-adjusted returns.”
He said the infrastructure fund has attracted a broad range of institutional investors that can access large-scale projects, adding that the firm’s recet deals “have brought together consortia of international investors that reinforced our relationships, paving the way for this fund.”
NAEV increased its investment volume by 4.1% in 2019 to €13.69bn with returns of €235m to €608m.
The pension fund has gradually reduced its exposure to asset classes where returns are based on interest rates, while adding private debt to its portfolio.
Bonds make up 31.2% of its investments, compared to 37.4% in 2016, plus 13.5% in convertible bonds. It also invests 11.6% in mortgages; 16.4% in real estate, 10.5% in equities, 4.7% in private equity, 6.1% in infrastructure, and the remainder in other alternatives, including private debt (3.1%).
The COVID-19 crisis has added pressure to markets and asset classes since March, the fund stated. NAEV avoided forecasts for the second half of 2020, but believes stock market performance this year will certainly be significantly below the prior year.