CleanCapital plans to 'put equity in as many deals as we can find' throughout 2021

CleanCapital is building momentum, recently securing a USD 300m commitment from Manulife Investment Management and acquiring 63 MW of C&I solar projects spread across 10 states and DC. Investment Bank Javelin Capital acted as adviser to CleanCapital on the transaction and Kirkland & Ellis represented the firm while Baker McKenzie represented Manulife.

This acquisition pushes the company to 200 MW of projects under management and over USD 775m of investments since its founding in 2015. But according to CleanCapital CEO Thomas Byrne, who spoke with NPM about their new investment, this acquisition is only the beginning of what CleanCapital has planned for the rest of the year.

NPM: Can you give me a little background on CleanCapital and describe your areas of interest in the renewables market?

Thomas Byrne: When we were founded in 2015, our primary purpose was to drive capital into clean energy at the broadest level. We have focused specifically on a segment of the market that we call the middle market. It is everything between residential and utility. Back when we started there was only a small handful of investors participating in clean energy, let alone in this middle market. Since then, we have been able to change that bringing in investors like CarVal and BlackRock and now Manulife into this middle market space.

NPM: Do you operate primarily as an equity or debt provider?

A key milestone for this transaction is we are now bringing all our capital onto our balance sheet. This is a massive amount of capital being projected right onto our balance sheet and that allows us to do a multitude of investments. But our primary ones are equity investments. We source tax equity through our proprietary sources and the debt through capital markets. We are among the best at doing that. But now with this source of capital, and our recent restructuring, we have a massive balance sheet that will allow us to put equity in as many deals as we can find.

NPM: Are acquisitions a significant part of your business model?

There are three key areas that we are focused on. One is acquiring and operating assets, which is exactly what we have done with this closing. We also want to be a capital partner to new construction assets, and we have the flexibility with our capital right now to provide that capital at a variety of different stages from NTP, even prior to construction, all through construction. And now we are stepping big time into storage. By the time we deploy all this capital we expect storage or solar + storage to comprise a large segment of our overall portfolio.

NPM: Do you commission original projects, as well?

We focus primarily on funding projects during construction. We do have the flexibility, though, to put some dollars in pre-construction to help developers get their projects over the finish line. And we invest over the long term, which is a critical piece of the puzzle. Not only will we invest, but we will stick by our partners until their project is completed.

NPM: I understand Manulife also wants to grow their portfolio of energy assets; does that mean they are getting a piece of these portfolios that you are acquiring or are they getting RECs or some other agreement between the two of you?

They invested this capital into our company, and we will then take that capital and go out and buy projects. All of these projects are on the balance sheet and are to the benefit of our investors, of whom Manulife is the largest. But we will own them and operate them over the long term.

NPM: Did you have a relationship with Manulife before, or is this your first time working with them?

Manulife is the parent company to John Hancock and our first deal was with them. They are a long-term, trusted partner of ours and we are proud that they want to keep doing business with us.

NPM: Can you tell me about these portfolios you are acquiring?

These portfolios have been in our pipeline for a long time; we geared them toward the closing of the Manulife transaction, which is why they happened at the same time. We are proud that we have done business in 18 states over our lifetime. This portfolio is emblematic of the fact that we can go into many different states and understand the policies and revenue models. We have a multitude of different origination channels, one of which is building relationships with project owners over time. It is a complicated market and the number of assets that we are acquiring reflects that complexity and where we really add value for our customers.

NPM: You mentioned that CleanCapital has plans to invest in storage this year. Can you tell me about the scope of the investments you are planning?

We want to be a capital solution to the transforming energy market. We cannot do that if we are not a leader in the storage space. It is where the energy market is going, and you need to be involved in it to be a true leader in the space. We had our first storage acquisition last year. We have done a lot of origination and underwriting in the space over the last 18 months. In our pipeline right now, we have several interesting storage opportunities that we [anticipate] closing on throughout the year.