GCP raises first renewable energy fund

Industrial heavyweight GLP Capital Partners has expanded into third-party capital management in infrastructure, beginning with a commingled fund focused on China’s renewable energy sector.

The firm has closed on 4 billion yuan ($554 million, €506 million) in equity for the RMB-denominated GCP China New Energy Fund I with commitments from domestic institutions including National Green Development Fund and feeder funds affiliated with CHN Energy Investment Group, one of China’s largest electricity providers and a prominent state-owned enterprise in the energy sector, according to a release.

With the overall investment in the fund expected to reach 20 billion yuan, the capital raised will be invested across the renewable energy sector, including wind energy, solar energy, energy storage infrastructure and related energy management solutions. The firm will look at both greenfield projects as well as acquisitions. The return target for the strategy has not been disclosed.

“This is a significant fundraise for GCP and we are pleased to raise third-party capital from partners who share the same vision for strengthening renewable energy investments,” said Teresa Zhuge, executive vice-chairman and president, China, at GCP, in a release.

It is understood that launching a fund in China represents the first step of the firm’s expansion in managing third-party capital for renewables and infrastructure, according to a source close to the situation. The source told PERE that GCP is planning to roll out third-party capital raising for new data center and renewables strategies across Asia and Europe later this year.

While the firm has invested in Japan, Europe, US and Brazil for renewables, China is GCP’s largest target market for the strategy, in terms of both the opportunity set and investor demand. According to the GCP release, China is planning to increase the non-fossil fuel share of total energy consumption to 25 percent by 2030 and 80 percent by 2060. As a result, the amount of renewable energy generated by wind and solar is expected to grow significantly.

The industrial specialist first began investing in infrastructure through the formation of a solar joint venture in China with Brookfield Asset Management in 2018. The partners agreed to commit as much as $2 billion to the venture, which was aimed at providing rooftop solar energy across the country, over the next five years.

At the time, Ming Mei, founder and executive chairman of GCP, told PERE: “Once the business has reached a meaningful scale, we’ll bring in third-party investors. The first rights will go to existing investors but we’ll also bring in new investors, too.”

Besides renewables, the firm has also invested in electric vehicles infrastructure and related technologies via its private equity vehicles.

The renewable energy fund is not GCP’s first foray into third-party capital management outside of real estate, however. The firm previously launched a platform and fund focused on private equity in 2018.