EQT Active Infrastructure platform co-head provides views on mature renewables space

EQT’s Active Core Infrastructure platform intends to take a very active role in ownership of renewable assets spurred by both the IRA2022 and value opportunities starting to emerge in the sector, said Alexander Greenbaum, partner at EQT and co-head of the platform in a wide-ranging interview with NPM.

EQT formally launched its Active Core Fund in March 2022 with a EUR 5bn target.

The 25-year fund distinguishes itself from other infrastructure core platforms as it is one of the only teams fully dedicated to investing in core infrastructure sectors to take controlling or co-controlling positions in assets, as opposed to passive stakes.

Greenbaum joined EQT in March 2022 after a nearly seven-year stint in the infrastructure platform for Singapore sovereign wealth fund GIC, including the last four as head of the North America group. At EQT, he co-heads a 16-member group devoted to this core strategy globally. While a separate fund, the Active Core Infrastructure team will leverage the expertise, deal sourcing capabilities and value creation toolbox of EQT’s broader infrastructure platform.

Greenbaum forecasts that about 33% of the fund’s bucket could be in renewables and utilities, with the balance spread amongst mature digital infrastructure and transportation. The fund will be balanced between North America and Europe.

Within the renewables and utilities bucket, EQT will primarily be looking for de-risked assets either already in operation and/or post-NTP as well as select higher growth opportunities.

“Rising interest rates and a change in the supply/demand balance for operating assets has driven de-risked solar and wind returns up to 7% to 8%, while it had been lower a couple of years ago,” said Greenbaum, adding that “We are also seeing certain assets in the marketplace with the potential to return in the 9% to 10% range.”

Greenbaum added that higher IRR opportunities will come in “repowering opportunities, transmission congestion issues that need to be managed or power hedges that need to be restructured.”

Utilities have created numerous carve-out opportunities in this space in recent years as a way to pay down debt, raise capital and modernize their regulated businesses. Duke Energy, American Electric Power (AEP) Consolidated Edison and Pacific Gas & Electric (PG&E) have looked to sell all or part of their unregulated renewable businesses, while Dominion Energy and Eversource Energy have publicly indicated an interest in raising capital to either exit or sell down their positions in their offshore wind projects.

Separately, larger developers such as Apex Clean Energy and Enel Green Power are selling their late stage assets as they look to recycle capital into their pipeline of renewable and clean energy investments.

“The 2022 IRA was a big win for developers, but they are now faced with the question of how do I find the capital to fund that growth,” said Greenbaum, adding that at some point the capital needs outstrip the organic cashflows of most enterprises.

*This story was originally published exclusively for NPM subscribers last month.


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