Wealth & Finance International - Fund Awards 2015

www.wealthandfinance-intl.com 17 The ASO value creation strategy consists in focusing on the steepest part of the project value curve, i.e. the construction phase. The core expertise of ASO is to select investment opportunities and contractually structure transactions to mitigate construction and operational risks. The investment process of ASO consists in originating a construc- tion-ready solar project and, after completing a due diligence, acquiring the special purpose vehicle (“SPV”) owning the construction permit to such project. Unlike a project financier, ASO does not lend to developer or the project SPVs. As project owner, ASO then negotiates and exe- cutes all key contracts relating to the construction and operation of the plant. As ASO does not take the financial exit risk, it further executes, at the time of the project acquisition, a sell-side transaction with a pre-identified long-term asset owner; such transaction completes once the construction has been finalized and the asset has been connected to the electricity grid. At all transaction stages, ASO implements best practices in terms of ESG. During the construction process, ASO has dedicated personnel on site to monitor the quality of the construction and the conformity with local construction laws, permitting restrictions, environmental mitigation plans, and health and safety guidelines. About Adiant Construction Opportunities In October 2015, Adiant will launch Adiant Construction Opportunities (“ACO”), a follow-up construction capital fund to Adiant Solar Oppor- tunities. ACO is structured as a conventional fund based on a Luxem- bourg SCS SICAV-SIF structure and is open to institutional investors and high net worth private investors. “The rationale for ACO includes a number of factors,” explained Caïjo. “Firstly, based on market feedback, investor appetite for our construc- tion capital strategy is high, as it combines private equity-like returns to the attractive energy infrastructure class. Secondly, there is still a high demand for construction capital globally and, thirdly, demand for construction capital stems from all renewable sectors and also from conventional power. We believe there is a strong rationale for a follow-up fund to ASO with a broader scope and a similar investment strategy.” In addition to solar, ACO’s scope therefore also includes wind power and other renewable energies but also cleaner conventional energy infrastructure, all facing similar construction capital constraints. Leveraging ASO’s market presence, ACO sees immediate opportunities in mature markets such as Germany, France, the UK, and Scandina- via but also in more recent markets such as North America. With the renewable energy market in constant development, ACO may adapt to new markets opening up. ACO has a target volume of € 300 million. Such capital will be deployed over a 4 to 6 year investment period. ACO aims at delivering mid-teen returns and up to 2.0x multiple on invested capital. With cornerstone investors already identified, ACO anticipates a first close during the first half of 2016. Why investing in the construction phase? The renewable energy sector has been criticised for its reliance on an overly subsidised and regulated phase, characterized by the entry of many opportunistic investors and market shakeouts induced by unstable regulation. This, in turn, has, in certain cases, resulted in poor investment performance and negative sentiment about the sector. Nevertheless, in this phase, a critical mass of the industry was achieved across the value chain and, following a necessary market consolidation, the sector has achieved a remarkable cost reduction placing renewable energy assets competitively with conventional technologies. “Because we have chosen an investment strategy that specifically focuses on the construction stage, which means short investment-di- vestment cycles, our funds are practically immune to the regulatory changes.” explained Caïjo. The short cycle investment strategy also allows Adiant to flexibly arbi- trage between different geographic regions, and capitalise on whichever country is most attractive without bearing long-term exposure to regula- tory and currency movements. The Adiant investment team has a long experience investing in renew- able markets since the early days. As such, the firm capitalises on its ability to anticipate the markets patterns and to have a realistic view on the pricing of assets. “When a new market opens up, like the UK five years ago, demand for our construction equity is high due to our ability to deploy capital rapidly. In mature and sophisticated markets such as Germany, which represents half of the global renewable market, it is the flexibility of our capital to adapt to new investment situations that is sought after. “ said Dr. Hammon. What new investment products will Adiant be offering in the near future? Looking forward, the renewable infrastructure sector will continue to grow by increasingly relying on pure economic drivers rather than sub- sidies. According to the International Energy Agency, the growth in the renewable infrastructure sector will remain unaffected by low oil prices and the required investment volumes will exceed US$1,000 bn over the next 5 years. Away from its construction products, Adiant will in 2016, address the private wealth and insurance segments and propose long dated, fixed income products based on operating energy assets, which will primarily be delivered by Adiant Solar Opportunities and Adiant Construction Opportunities. The product will offer a superior degree of capital and performance guarantees and an attractive annual yield payment to investors.