Global infrastructure and private equity manager Foresight has launched a new investment fund - its first foray into Australia's wholesale market.
Tapping into the desire for green income, the Foresight Renewable Energy Income Fund will make loans of $5 million to $30 million for small-scale solar and wind amongst other renewable projects.
The loans will be structured under a sustainability framework and certified by the Climate Bonds Initiative and verified by the Carbon Trust.
Foresight said the fund's target is 4-4.5% over the RBA cash rate.
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This is Foresight's first wholesale fund in Australia.
The fund will provide Australian wholesale investors with access to the Climate Bonds Initiative certified green debt.
It is designed to generate returns by investing in Australia-based and mostly small-scale renewable energy projects - with the objective of offering investors predictable income and yield margin and diversification benefits through lower correlation with the broader equity, property and bond markets.
The green bond asset class had typically been most readily available to institutional investors.
Foresight head of Australia Kim Nguyen said: "The Foresight Renewable Energy Income Fund is innovative in a global sense. We hope it helps put Australia on the map as an innovator in the fast-growing green debt capital markets."
"Historically, the big banks have overlooked smaller-ticket wind and solar projects, as they are generalists and lack the dedicated resources to identify and assess small-scale projects. This presents a significant opportunity for us as infrastructure investment specialists," Nguyen said.
With a proven 35-year investment track record, Foresight has the experience and the sector knowledge to best capture these opportunities in the interest of Australian investors."
Foresight head of infrastructure Nigel Aitchison said: "There is no question that the surge in interest for green bonds and renewable energy infrastructure will only continue to intensify. Investors have shifted their focus to true-to-label investment solutions that directly contribute to the global decarbonisation agenda."