Leading Australian investment manager QIC today announced, on behalf of its managed clients the Future Fund and those invested in the QIC Global Infrastructure Fund (QGIF), its $800 million investment alongside AGL Energy Limited (AGL) in the Powering Australian Renewables Fund (PARF).
This strategic partnership is the first of its kind in the development of large scale renewable energy infrastructure in Australia.
PARF will be a $2-3 billion owner of more than 1,000MW of large-scale renewable energy projects to support Australia’s renewable energy capacity and transition to a low-carbon economy. Once fully invested, PARF expects to own approximately 10% of Australia’s renewable energy capacity.
QIC CEO Damien Frawley said the partnership was a positive and important national step in the global trend towards decarbonisation: “QIC is proud to create this ‘first of a kind’ partnership between institutional capital and a key energy industry participant such as AGL.
“PARF is the most significant step to date towards meeting the Australian Federal Government’s Renewable Energy Target (RET), and should contribute up to 10% towards the overall target. This is the equivalent of taking 800,000 cars off the road or saving approximately 2.7 million tons of greenhouse gas. At the same time we expect to deliver strong risk-adjusted returns for key clients by developing a pipeline of large scale renewable energy generation in Australia.
“We have a track record of strong ESG practices within the assets we acquire and then actively managing them. This partnership is a significant and more strategic step to develop the Australian renewables sector as a whole, while delivering target investment returns for our clients,” said Mr Frawley.
Ross Israel, QIC’s Head of Global Infrastructure, said: “We expect renewables, in combination with energy storage and smart grid technologies, to disrupt the existing electricity value chain in the future.
“This partnership paves the way for future investment that supports Australia’s transition to a low-carbon economy.
“Development of renewables infrastructure has previously been risky for institutional capital. Barriers to investment included policy uncertainty, the resulting pricing fluctuations and the difficulty for industry participants and institutional investors alike to finding partners with both the expertise and the capital to work across the whole renewables value chain.
“In partnership, QIC and AGL are able to develop, own and manage both existing (brownfield) and new (greenfield) renewable assets, while establishing a governance framework to derisk the investment. The relationship leverages AGL’s development expertise, and their scale as one of Australia’s largest energy retailers, to provide long term offtake (retail sale) agreements. QIC brings active asset management expertise and deep sector capability.
“We considered our entry strategy into renewables in Australia for many years. It’s now pleasing to have secured this partnership with AGL. Through it we can provide our clients with a portfolio diversification strategy into Australian renewables,” said Mr Israel.
AGL Managing Director & CEO Andy Vesey concluded by saying: “We are pleased to have such high quality fund managers backing the PARF, and to seeing this initiative spur investment and development in support of Australia’s transition to a low-carbon economy.”
In addition to the $800 million commitment from QIC’s managed clients, AGL has provided $200 million of cornerstone equity. PARF will be a key part of Australia’s renewable energy capacity representing around 10% by 2020 upon successfully reaching 1,000MW.
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QIC is a global diversified alternative investment firm offering infrastructure, real estate, private equity, liquid strategies and multi-asset investments. It is one of the largest institutional investment managers in Australia, with $75.8 billion (US$56.4/£42.2 billion) in funds under management, offering infrastructure, real estate, private equity, liquid strategies and multi-asset investment services. QIC has over 500 employees and serves more than 90 clients including governments, pension plans, sovereign wealth funds and insurers, spanning Australia, Europe, Asia, Middle East and the US. Headquartered in Brisbane, Australia, QIC also has offices in New York, San Francisco, Los Angeles, London, Sydney, and Melbourne. For more information, please visit: www.qic.com.
About QIC Global Infrastructure:
QIC is a long-term infrastructure investor with an established global platform. We currently manage $7.0 billion (US$5.2 billion/£3.9 billion)) across 10 global direct investments, having realised a further $7.0 billion (US$5.2 billion/£3.9 billion)) of investments for our clients. Our sector centric investment strategy deconstructs risk across sector value chains identifying relative value for investment. This drives a targeted origination approach which has seen us build diversified portfolios for our clients, protecting their capital while delivering strong total returns since 2006.
AGL is one of Australia’s leading integrated renewable energy companies and is taking action to gradually reduce its greenhouse gas emissions while providing secure and affordable energy to its customers. Drawing on over 175 years of experience, AGL serves its customers throughout eastern Australia with their energy requirements, including gas, electricity, solar PV and related products and services. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, solar, landfill gas and biomass.
About Future Fund:
The Future Fund is Australia’s sovereign wealth fund, investing for the benefit of future generations of Australians. The Future Fund was established in 2006 to accumulate financial assets to offset the Australian Government’s unfunded superannuation liability from 2020. The role of the Future Fund is to generate high, risk adjusted returns over the long-term. It operates independently from Government. As at 31 March 2016, the value of the Future Fund was A$117.38bn. Read more at www.futurefund.gov.au.
QIC Limited ACN 130 539 123 (“QIC”) is a wholesale funds manager and its products and services are not directly available to retail clients. QIC is a company government owned corporation constituted under the Queensland Investment Corporation Act 1991 (Qld). QIC is regulated by State Government legislation pertaining to government owned corporations in addition to the Corporations Act 2001 (Cth) (“Corporations Act”). QIC does not hold an Australian Financial Services (“AFS”) licence and certain provisions (including the financial product disclosure provisions) of the Corporations Act do not apply to QIC. Please note however that some wholly owned subsidiaries of QIC have been issued with an AFS licence and are required to comply with the Corporations Act. QIC also has wholly owned subsidiaries authorised, registered or licensed by the United Kingdom Financial Conduct Authority (“FCA”), United States Securities and Exchange Commission (“SEC”), the Korean Financial Services Commission and Irish Central Bank.
For more information about QIC, our approach, clients and regulatory framework, please refer to our website www.qic.com or contact us directly.
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