Hands bets on renewables with $5bn China partnership

Private equity stalwart Guy Hands is in early talks with the China Development Bank on launching a global renewables-focused fund. Terra Firma will help sell the fund to European and US investors while the Chinese bank will focus on Chinese LPs.

Terra Firma, the private equity outfit led by renowned industry figure Guy Hands, is in early talks with the China Development Bank (CDB) over the launch of a global renewable energy fund targeting between $3 billion to $5 billion, sources familiar with the process confirmed.

The plans, first reported by the Financial Times earlier this week, will see Terra Firma and CDB jointly manage the new infrastructure vehicle. Hands’ firm will help market the fund to European and US investors with the CDB selling it to Chinese investors. The fund will, however, target projects all over the globe.

The source said Terra Firma has been encouraged by the success of its three renewable investments and has decided to pursue the sector further. The private equity group already owns Infinis, the UK’s leading renewable energy supplier, Italian solar power leader Rete Rinnovabile, and EverPower, a US wind farm group.

Terra Firma, which manages some €11 billion across four funds, made the headlines last year after its investment in music firm EMI was seized by US bank Citigroup, the deal’s advisor and main creditor.

Renewable energy funds are proving increasingly popular with investors. According to the latest figures from placement agent Probitas Partners, renewable vehicles accounted for 15 percent of the $16.9 billion raised by the end of the third quarter, up from 4 percent of the total amount raised by infrastructure funds during the second quarter of this year.

* Join the biggest names in renewable energy investment at the Infrastructure Investor Renewable Energy Forum 2012 as they discuss the drivers behind this maturing asset class. Click here for more information.