Renewable Energy fund

The IIG Solar Asset Fund

Targeting a 10% IRR, pre-tax, post fees, with a tax effective yield of 8% targeted for years 1 to 3.

Published: April 4, 2018

About The Fund

An opportunity for wholesale investors to co-invest with IIG in an unlisted portfolio of up to $180m in Australian solar infrastructure assets, with exposure to the electricity spot market.

Australia’s electricity market is undergoing a structural transition away from aging fossil fuel generators towards cleaner energy production.

The IIG Solar Asset Fund owns large- scale solar farms intended to meet the market’s demand for new generation infrastructure.

This is the next stage in IIG’s clean energy journey, following the successful 2016 launch and delivery of the IIG Solar Income Fund.

Investment Features

  • Expected reliable cashflow from real assets, with limited correlation to financial market fluctuations;
  • Tax effective returns, benefiting from high depreciation in early years;
  • 20 year term with an exit sought in years 5 to 7;
  • Solar infrastructure assets with exposure to the National Electricity Market (NEM), and potential for Power Purchase Agreements (PPAs);
  • Known portfolio of seed assets with well- mitigated construction risk;
  • Manager with a strong record delivering and operating similar assets;
  • Highly respected, majority independent board comprising experienced energy and infrastructure industry leaders, chaired by Chloe Munro AO.

Investment Objectives

  • Provide investors with access to a diversified portfolio of Australian solar infrastructure assets which generate commercial returns from electricity and related markets;
  • Deliver attractive total returns and provide investors with reliable, tax-effective quarterly distributions;
  • Generate measurable environmental and social impact including reducing emissions, water usage and negative health impacts from fossil fuels.

Investment Strategy

  • Invest in solar infrastructure assets that are fully contracted for construction and initial operations;
  • Complete the construction of seed assets that are being delivered at a cost of approximately
    $120 million;
  • Acquire further assets that meet the investment mandate and further diversify the portfolio;
  • Operate solar infrastructure assets that provide exposure to Australia’s NEM, and have potential to enter into PPAs.

Electricity Market Strategy

Australian wholesale electricity prices have risen relative to historical prices due to structural changes in the market. Australia’s gas supply is exposed to international prices and coal-fired generators are being retired. Both factors will persist and place upward pressure on wholesale electricity prices.1

In IIG’s assessment, the PPA market is currently concentrated and illiquid, with much of the value transferring to purchasers. This means a merchant power strategy (selling electricity on the open market) is currently more financially attractive than entering into PPAs.

The Fund’s assets are suitable for entering into PPAs, if the PPA market improves and the board asseses that doing so is in the best interest of investors.

1 Based on modelled forecasts by EY, which incorporate assumptions provided by IIG. Refer to information memorandum for further detail.

Key Figures
IRR 10% Pre-Tax Post-Fees Target
Yield 8% Targeted for years 1 to 3
Clean Electricity 24,000 Average Australian Homes

Solar Farms Under Construction

Under Construction
Swan Hill

The Swan Hill Solar Farm

A 19MW solar farm currently under development in north west Victoria..
More on this asset
Under Construction
Chinchilla Solar Farm

Chinchilla Solar Farm

A 19.9MW solar farm under construction 300kms northwest of Brisbane, Queensland..
More on this asset

Fund Snapshot

  • Target Fund Size $180 million of solar infrastructure assets
  • Equity Investment Offer Target $110 million
  • Opening Date May 2018
  • Minimum Investment $100,000
  • Unit Price & Structure $1.00 per unit, partly paid
  • Capital Calls Partly paid on investment confirmation. Refer to information memorandum for further detail.
  • Target Distributions Quarterly, averaging 8% over first 3 years.
  • Target IRR 10% over Trust term
  • Gearing Debt will be senior secured at the asset level and to a maximum 50% LVR.
  • Suitability All investors must be wholesale clients as that term is defined in the Corporations Act 2001(Cth).

Impact Agenda

Abate 4.1 million tonnes CO2-e
Benefits to climate from producing renewable power and reducing carbon emissions.
Produce 4.2 million MWh of low emissions power generation over the life of the seed assets.
Abate 138,000 tonnes of CO2-e on average per year and 4.1 million tonnes of CO2-e over the life of the seed assets.

Avoid 78 deaths
Benefits to health and wellbeing by reducing from pollution-related diseases.
Reduce the release of environmental toxins from primarily fossil fuel electricity generation in the current NEM/grid, resulting in 78 deaths avoided and 42,000 illnesses avoided over the life of the seed assets.

Save 15,050 megalitres of water
Benefits to water from reducing consumption.
Reduced water use relative to primarily fossil fuel electricity generation on the current NEM/grid, with savings estimated at 15,050 megalitres over the life of the seed assets.

Create 470 jobs, via seed assets
Benefits to shared prosperity by investing in new construction.
Create more than double the number of jobs than oil, natural gas and coal facilities (per $1 million in output). The seed assets, over their lifetime, are expected to create 470 direct and indirect jobs.
Increase economic activity, mostly in regional areas, which can boost local economies.

This page has been prepared and issued by IIG Solar Assets Pty Ltd (ACN 620 659 574) as the corporate authorised representative of Impact Funds Management Pty Ltd (ACN 138 179 914, AFSL No. 356648). IIG Solar Assets Pty Ltd in its capacity as trustee for IIG Solar Asset Trust (“Fund”) will issue an Information Memorandum (“IM”) for the Fund to set out the offer to apply for units and loan notes in the Fund. A copy of the IM may be obtained by contacting IIG Solar Assets Pty Ltd. The Fund is an unregistered managed investment scheme. If you are considering an investment in the Fund you must read the IM in its entirety. The information in this page has been made available to the recipient for information purposes only. It is not intended to be, and does not constitute a PDS, prospectus, short form prospectus or profile statement as those terms are defined in the Corporations Act 2001 (Cth). It does not constitute an offer for the issue, sale or purchase of any securities, or any recommendation in relation to investing in any asset. This document has been prepared without taking account of any particular investor’s objectives, financial situation or needs. For this reason, it is important that you obtain and consider the IM for the offer and seek appropriate independent professional advice before making any investment decision. This investment opportunity is only available to ‘wholesale clients’ or ‘sophisticated investors’ as defined in the Corporations Act 2001 (Cth). IIG Solar Assets Pty Ltd does not receive fees in respect of the general financial product advice it provides, however it will receive fees for establishing and operating the Fund, in accordance with the Fund’s Constitution. IIG Solar Assets Pty Ltd and its related entities may also receive fees for managing the assets of, and providing resources to the Fund. For more detail on fees, refer to the IM. Any investment is subject to risk, including possible delays in payment and loss of income and principal invested. Neither IIG Solar Assets Pty Ltd nor any of its associates, related entities or directors guarantee the performance of any investment or the repayment of monies invested. This page contains indicative and summary information only. Information contained in this page may be supplemented or replaced by more complete or accurate information contained in the IM. While every care has been taken in the preparation of this document, IIG Solar Assets Pty Ltd does not warrant as to the accuracy or completeness of any statement in it including, without limitation any forecasts or opinions. To the maximum extent permitted by law, IIG Solar Assets Pty Ltd disclaims all liability for any loss or damage which may arise out of the provision to, or by, or use by, any person of the information contained in this document. All figures stated herein are as the date of this page unless otherwise stated.