Having already secured €100m in seed money, Allianz Global Investors (AGI) is rolling out its first renewable fund for institutional investors.
The fund, called the Allianz Renewable Energy Fund (AREF), plans to invest up to 80% of the assets in offshore wind and solar energy parks across the euro area. The remaining 20% is to be invested in other renewable technologies like hydroelectric and biogas.
The closed fund will have a lifespan of 25 years and according to AGI, will invest in markets where returns can range between 6% and 8%.
AGI is now the second German asset manager selling renewables funds to institutions as the German shift to green power accelerates. The other is Union Investment, whose first product has taken in €50m.
The AGI fund takes the form of a Luxembourg SICAV and was partly capitalised by AGI’s parent firm, the insurance giant Allianz. AGI did not disclose how much of the seed money was from the insurer, saying only that it was a small amount.
“The lion’s share of the money has come from German pension schemes and other insurers, which has made us very pleased with the fund’s launch,” said Tobias Pross, head of European institutional sales at AGI, during a news conference last week.Allianz is itself a major renewables investor, having already put €1.3bn of its assets in seven photovoltaic parks and 35 onshore wind farms. In finding those projects, the insurer was advised by in-house unit Allianz Climate Solutions GmbH (ACS), headed by chief executive Armin Sandhövel. ACS also advises Allianz on which renewable projects to insure.
Since the start of this year, Sandhövel is also chief investment officer for the newly-created AGI unit Renewable Energy/Infrastructure. Speaking at the conference, Sandhövel said AGI had a “unique selling proposition” in the renewable fund business due to the Allianz group’s long history of insuring renewable projects. “If there is anyone who knows the projects and their risks, it’s us,” he said.
Pross and Sandhövel were also optimistic that regulators would amend Solvency II so that renewable investments from insurers would not be treated as equities. In its current form, Solvency II requires insurers using the standard model to hold in capital 49% of the value of their renewable investments.