Bluefield Partners, a renewables-focused investment firm headquartered in London, plans to raise up to €500 million for its next closed-end fund, aiming to reach a first close in the first half of 2025, its co-founder and managing partner Giovanni Terranova told Infrastructure Investor in a recent interview.
Though the fund will not be Bluefield’s first, it will be the first vehicle that will invest primarily in Europe in solar, wind and battery storage. It will also have some exposure to the UK, the first market Bluefield targeted when it came into existence in 2009. The UK is also the target market for its Bluefield Solar Income Fund, the first such fund to be listed on the London Stock Exchange, according to Terranova.
“That fund started in July 2013 with £130 million ($166 million; €154 million) and today it has assets of around £1.4 billion,” Terranova pointed out. “That’s a 10-fold increase in 10 years.”
Since then, Bluefield has launched an additional seven private strategies, most of them targeting the UK solar sector. It was not until 2019 that the firm broadened its focus beyond the UK, with three funds targeting the solar sector in Italy and the Netherlands.
The latest one to do so, Bluefield Revive, was launched in 2021, reaching an oversubscribed hard-cap of €100 million. The firm’s AUM currently stands at £2.3 billion and its LP clients are predominantly institutional investors from Europe and the UK, with family offices accounting for around 10 percent of its client base.
The ‘backbone’ of renewables
The next fund, however, is expected to “be a diversified multi-country strategy investing in wind, solar, and battery storage”, Terranova explained, falling under the firm’s value-add strategy. It will invest in greenfield as well as repowering existing assets. “[The latter] will be mostly for countries that are mature, like Germany, Italy, France, UK, and wind in Spain, predominantly.”
Still, a meaningful portion of the next fund’s investments – such as the firm’s existing 1.3GW portfolio and its 2.1GW project pipeline – will be in solar, a sector Terranova described as “the backbone” of renewables, citing attributes such as modularity, low technology risk, relative ease of construction and stable yield.
Wind comprises roughly 15 percent of Bluefield’s portfolio and could potentially increase to 25 or 30 percent. As for energy storage, the percentage of standalone batteries will be “quite low”, he said.
But co-location will account for a larger share of the firm’s portfolio going forward.
“If you look at the larger portfolio we have, which is the UK one, we are starting to retrofit existing assets with co-location of batteries. And I think, going forward, we will be obliged to put in storage because you will have two power curves: one for standalone solar and wind, and one for co-located assets, [which can capture better returns],” Terranova said.
Double-digit returns
The next fund will target double-digit returns, in line with the level of returns all of Bluefield’s funds under the value-add strategy target. According to the firm’s website, all closed funds have reached or exceeded their return targets.
Asked whether repowering, which is less risky, will also generate lower returns, Terranova replied: “No, our experience so far has been that actually the returns in both wind and solar are in the double digits. Maybe repowering will have returns that are 1 or 2 percent higher.”
He also noted that while repowering assets may be less risky, it is still a complex process.
“It takes a long time to reapply for planning permits, particularly for wind assets. In a way, it’s a new construction, but you also have to deal with the removal of the existing assets; you have to see whether you can reuse some of the existing infrastructure. So, you need to have the technical expertise to do it.”
Bluefield Partners has built that expertise not only by investing in solar since 2009, but also thanks to its business model. The investment firm is one part of the Bluefield Group, which includes three other companies focusing on technical asset management (Bluefield Optimisation), operations and maintenance (Bluefield Operations) and project development (Bluefield Renewable Developments).
“It’s a sort of end-to-end approach, which we think is one of the reasons for our strong performance,” Terranova said. “We spent a lot of time these past 14 years building up this operation.”