New Energy lifts fundraising cap to $500m for second credit fund

The infrastructure shop is raising another pool of capital to fund energy efficient infrastructure after its debut vehicle closed above target.

New Energy Capital has increased the upper limit of its latest clean energy credit fund by $100 million after an oversubscription pushed it past the vehicle’s initial cap.

The Hanover, New Hampshire-based infrastructure investment firm bumped up the ceiling for its New Energy Capital Infrastructure Credit Fund II to $500 million from the $400 million outlined in a September Securities and Exchange Commission filing.

So far, New Energy – which could not be reached for comment – has collected $474.83 million for the vehicle. The firm in April 2017 ultimately raised $325 million for its initial credit fund, beating its $250 million target. The firm targets companies or projects needing $15 million-$150 million in capital and will write a $5 million-$40 million cheque for an equity or debt investment, according to New Energy’s SEC registration.

Over the next 12 months, investors plan to largely keep their allocations to infrastructure credit the same, with 76.1 percent of limited partners planning to do so, according to the PEI Perspectives 2019 survey. Some 15.5 percent said they would increase their commitment level to the strategy, while 8.5 percent plan to decrease the amount to infrastructure debt.

New Energy’s fund series targets clean energy infrastructure and is focused on environmental sustainability – particularly on reducing carbon emissions, according to Montgomery County Employees’ Retirement Plan documents. The Maryland pension fund classified New Energy as part of its environmental, social and governance portfolio.

Also in the PEI Perspectives survey, a slight plurality of infrastructure investors – 41 percent – said ESG was a “major consideration”, while 39 percent said it was a “minor consideration”. One-fifth of LPs said ESG was not a priority.

New Energy is not alone in using infrastructure debt as an ESG strategy; both smaller and larger asset managers are turning to the approach. NN Investment Partners launched a €200 million fund for ESG-focused investments in November. Additionally, AMP Capital, which is on its third credit fund, has executed on investments with a core focus on ESG through its vehicles.