Macquarie gets Green to go green

Australia's Macquarie Group, the biggest manager of infrastructure assets worldwide, has appointed a top executive to make and manage investments in renewable energy infrastructure in North America.

The firm named Bill Green as senior managing director at Macquarie Capital Funds, the funds management division of Macquarie’s investment bank, where he will build a team to invest in renewable energy infrastructure assets.  He will be based in New York and San Francisco.

Macquarie isn’t new to the renewable energy sector. The firm has already acquired interests in 20 renewable energy infrastructure projects for its funds totalling 2 gigawatts of electric generation capacity, according to a statement.

However, the appointment signals a more systematic commitment by Macquarie to grow renewables’ share of its infrastructure asset portfolio, which comprised 97 businesses valued at A$116 billion ($107.9 billion; €74.4 billion) as of September 2009, according to the latest Macquarie Specialist Funds Quarterly. Its renewable energy investments, by contrast, were valued at A$3.8 billion, according to the latest available breakdown, dated November 2008.

Bill Green

Macquarie’s renewables portfolio includes interests in hydro, wind and biomass projects by its Toronto-listed Macquarie Power & Infrastructure Income Fund; interests in a portfolio of French, Swedish wind farms and Spanish solar plants held by its unlisted Macquarie European Infrastructure Fund I and Macquarie Infrastructure Partners-owned Puget Energy, a Washington state utility with a large renewables exposure, among other assets.

Stephen Mentzines, head of Macquarie Capital Funds’ North American business, said in a statement that he sees a “growing opportunity” to put investors’ capital to work in the sector.

Green, who will report to Mentzines, spent seven years at VantagePoint Venture Partners, a $4.5 billion venture fund, where he co-founded its clean technology investment practice. At Macquarie, he will turn his attention to sourcing investments that can provide investors with stable returns more commonly associated with infrastructure investments, as opposed to higher-growth, higher-risk investments typical of venture capital.

“Historically, investments in the CleanTech sector have gravitated towards the venture capital end of the spectrum,” Green said in the statement. “But as renewable energy technology matures, we’ve also witnessed a substantial increase in available opportunities in the sector.”

In response to this trend, many infrastructure investors have been lately been busy building investment platforms that allow them to invest in renewables and still meet the criteria of infrastructure-style investing. That style of investing typically seeks out existing assets with stable, predictable cashflows; renewable energy assets, on the other hand, often have to be built from the ground up and can introduce elements commodity, regulatory and pricing risk.

Global Infrastructure Partners, a $5.64 billion infrastructure fund, has gotten around this difficulty by backing a renewable energy developer, New York-based Terra-Gen Holdings, using preferred equity which will convert into common equity once the first three phases of one of its new-development wind projects reach completion.

Energy private equity firm First Reserve is also looking more into the sector, having hired former Goldman Sachs partner Mark Florian to head its energy infrastructure team in 2008. Florian told InfratructureInvestor during an interview last year that most of his investments in power generation might fall into the renewable sector because of revenue-ensuring incentives being provided by various countries.

And in Europe, fund manager DIF is moving toward a third close on a €500 million infrastructure fund, DIF Infratructure II, which will have a one-third allocation to renewables and two-thirds to public-private partnerships.

Macquarie has also been making a big push into the renewable sector on the advisory side of its business. Its investment bank has previously established a Renewable Energy and Climate Change team to create and source investment opportunities presented by climate change.

The team is led globally by Sydney-based Oliver Yates, in Europe by London-based Ian Learmonth, in the Americas by New York-based Charles Wheeler and in Asia and South Africa by Hong Kong-based Anton Rohner.

The February 2010 issue of infrastructure investor will include an in-depth look at infrastructure-style investing in the renewables sector.