Sadly, projects like these are certainly not ten a penny

At the end of 2012, Allianz Global Investors launched the Allianz Renewable Energy Fund (AREF) as the first closed-end renewable energy fund for its institutional investors. Investors placed an immense amount of trust in the new business area and in the expertise of the team led by Armin Sandhövel: only a few months later, the fund was unable to accept any further investors, having reached a volume of EUR 150 million. With the acquisition of the "La Coste" photovoltaic project in Southern France, which was completed on December 10, 2014, the fund is now fully invested in various wind and solar park projects in four European countries after a period of only twelve months.

 

Why did so many customers want to invest in this strongly growing asset class?

 

Armin Sandhövel: Trust and pressure are increasing at a similar rate among institutional investors. In the current low interest rate environment, they need additional sources of return so that they will also be able to fulfil long-term liabilities, in particular. At the same time, more and more trust is being placed in a sustainable energy revolution: for more than three years now, more capital is being invested in renewable energy than in fossil fuel power plants. The prospect of regular payments on such investments, attractive returns and the opportunity to add an additional asset class to one's portfolio for diversification purposes is a combination of advantages that is hard to find at the moment.

 

What challenges did you have to face in connection with the project acquisitions?

 

The main challenge was finding the right projects for our investors and making sure that they complemented each other. This meant that there had to be an attractive balance between the purchase price on the one hand, and the quality of the facilities, the long-term power generation capacities and the corresponding regulatory framework conditions on the other. Sadly, projects like these are certainly not ten a penny, which leads to an extremely strong competition on the investors’ side.

 

Which projects are you particularly proud of?

 

All of them. As a trustee for our customers, we own first-class onshore wind farms and photovoltaic plants in Europe. A large portion of the investment funds is invested in Germany. But in addition to the electricity generated by our German solar and wind power plants, investors also participate in solar energy from France, the UK and Italy.

 

What's the special thing about the AREF investment from your customers’ perspective?

 

As well as enjoying above-average return opportunities over the next 20 years, AREF investors participate in the generation of environmentally friendly electricity that is sufficient to power more than 100,000 European households for an entire year.

 

How does Allianz Global Investors set itself apart from the competition in this asset class?

 

When you're making investments in projects with lifetimes of decades, it is important not to underestimate the risks involved. Regulatory conditions and increasingly also economic conditions play a key role in the renewable energy sector. The technical risk analysis of the projects, however, is also crucial when it comes to ensuring investment success for our customers. There are many different areas in which special expertise is required to ensure that individual project components in different countries are assessed correctly. This is why our close collaboration with Allianz is a decisive advantage. As a member of the Allianz Group, we have access to an international network of excellent in-house specialists and their connections to specialized technical experts, project developers and manufacturers. This puts us in the best possible position for meeting our customers' demands.

Dr. Armin Sandhövel, Chief Investment Officer Renewable Energies / Infrastructure Equity at Allianz Global Investors
Dr. Armin Sandhövel, Chief Investment Officer Renewable Energies / Infrastructure Equity at Allianz Global Investors

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:


 

Stefanie Waldeck
AllianzGI GmbH
Phone +49.69.263-14670
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