Tuesday, November 5, 2013

Quercus Assets Selection Acquires a 14MW Photovoltaic Project in Cornwall

The transaction, implemented through the Quercus Renewable Energy Fund II, marks the official entry to the UK photovoltaic market for Quercus.

Quercus Renewable Energy Fund II, a segment of Quercus Assets Selection, a company which specializes in the infrastructure investments with a focus on renewable energies, has completed the acquisition of a 14 MW photovoltaic project in Corwal, which is expected to be connected to the national grid by the end of March 2014. After the successful biomass investment with the UK Green Investment Bank in the anaerobic digestion plant in London concluded recently, Quercus begins its official entry into the competitive UK photovoltaic market, in which the company expects to be highly competitive for at least in the next 18 months, the period defined for the incentive structure. Quercus is currently carrying out due diligence for a photovoltaic projects pipeline totalling around 150 MW in the United Kingdom, which constitutes the first part of an overall portfolio estimating growth to 300 MW by the end of March 2015.

Despite a climate that differs from Southern Europe, the United Kingdom offers interesting investment opportunities, supported first and foremost by a stable and highly efficient market and a particularly low country risk. This allows an easy understanding of the exceptionally simplified regulatory system and a predictable evolution of the incentive structure, essential ingredients for optimizing investment planning. All of this is accompanied, among other things, by relatively low banking rates, a good incentive structure for the investor and highly competitive procurement costs for goods and services, also due to the adjustment of supply to sector dynamics. 

As Diego Biasi, Managing Director of Quercus said
"the fund is pursuing its investment activity in Europe in line with the initial plan communicated to investors. Investments in the United Kingdom began this year as soon as the local incentives policy was defined by the Government. The UK photovoltaic industry is more than ever a representative asset of the portfolio coveted by our investors due to the high stability of long-term returns, non-correlation to the financial and real estate markets, the ability to maintain a generally steady cash flow during the investment, essential elements for pension funds, banking foundations, insurance companies and other institutional investors who constitute almost our entire investor base".

About Quercus:
Quercus Investment Partners LLP is an investment company specialized in renewable energy infrastructure investments. Registered in the United Kingdom and regulated by the Financial Conduct Authority (FCA), Quercus offers advice to investors interested in allocating funds to renewable energy infrastructure projects. Moreover Quercus sources a large number of projects and structures investment opportunities that are suitable for institutional investors. Quercus arranges deals and assists investors through the entire investment process, from origination through due diligence, structuring, financing and execution.
Quercus Investment Partners LLP is part of a larger group including Quercus Assets Selection that is a Luxembourg based management company specialized in infrastructure investments. The company was founded in 2010 by Simone Borla and Diego BiasiQuercus Assets Selection manages different Luxembourg-based SICAV-SIFs regulated by CSSF whose core business is to invest in renewable energy projects across Europe.

Quercus has brought to far two renewable energy funds to the market:

Quercus Renewable Energy (QRE), Quecus's first fund, was launched in 2010. Aimed at taking advantage of the significant opportunities in the italian photovoltaic sector, the core strategy of QRE was to build, own and operate projects in the photovoltaic sector in Italy. In 2011 alone, QRE ammassed a portfolio of approximatey 50MW of capacity and a combined value of €200 million.

The target yield of QRE, is equal - according to the company website - to 2.7 times the invested capital with an IRR of 22% per year over a period of 3-5 years. QRE has successfully invested in 10 plants and has ceased fundraising. Currently, QRE's portfolio is planned to be liquidated within 3-5 years through sale to an energy company or infrastructure fund, or through securitization.

Quercus Renewable Energy II (QRE II), Quercus's second sub-fund, was launched in late 2011, and which was targeting €200 million early this year, with the sole purpose to seizing important investment opportunities offered by the energy sector in Europe. QREII has so far developed a portfolio of diversified projects for technology and geography. Projects for approximately 150MW of capacity are at an advanced stage of negotiation, with a significant pipeline of further investment opportunities in the solar, wind, mini-hydro and biomass sectors.

QREII has an expected return (IRR) of 13% per annum, reached through projects developed solely by Quercus and through joint venture investments. The exit strategy for QRE II is the same of the first fund, i.e. to gradually liquidate the investment portfolio during the life of the fund through sale of assets to an energy company or infrastructure fund, or through securitization.


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