European Investment Bank backs Prime Capital green energy fund
For the first time, the European Investment Bank is participating as an anchor investor in a green energy infrastructure fund that invests in the production of green fuels. EIB funds are contributing 100 million euros to a new fund from Frankfurt based alternative asset manager Prime Capital, which manages assets totalling around 14 billion euros.
The commitment comes as part of the third closing of the „Prime Green Energy Infrastructure Fund II“ (PGEIF II). The fund focuses on renewable energy across Europe, with an emphasis on Scandinavia.
„The total commitments currently amount to 313 million euros, about 45% of which comes from existing and 55% from new investors,“ says Prime Capital CEO Andreas Kalusche. „The target fund volume is around 700 million euros — and with the tailwind from EIB involvement, we might even reach 1 billion euros.“
That was the amount originally planned at the beginning of the fundraising in early 2023, which has been hampered by rising interest rates. Including debt capital, the investment volume is likely to reach around 2 billion euros. Fundraising was also challenging because many investors have already reached their legally or self-imposed limits for private equity allocations within their portfolios. Besides the EIB, there are nine other investors in the fund.
Electrolyzer in Finland
One of the first projects is an electrolyser with a capacity of 200 megawatts in Kristinestad, Finland, which will produce green hydrogen and e-methane as fuel for ships. Starting in 2025, cruise ships with diesel engines will no longer be allowed in Norwegian fjords. Shipping giant Mærsk will also stop using diesel-powered ships from 2030 onward. Reportedly, a sovereign wealth fund from the Gulf states is involved in Kristinestad and may act as a co-investor in other projects.
The fund has a ten-year duration with extension options, a net return target of 10–12% per year after fees, and as a dark green Article 9 fund it fully complies with the EU's ESG regulations.
„There is already a solid pipeline of projects in several Scandinavian countries, and Spain,“ said Mathias Bimberg, Head of Infrastructure at Prime Capital. Since 2012, the team has completed 40 green energy infrastructure investments with a transaction value of nearly 4 billion euros. The new fund is intended to help enable the decarbonisation of sectors that have been very difficult to tackle so far – such as heavy transport, maritime traffic, or the fertilizer industry.
