LESSONS FROM: Institutional Investors and Sustainable Energy Infrastructure: Mapping Channels and Approaches to Mobilise Capital Kaminker, C., K. Eklin, O. Kawanishi and R. Youngman (2014 forthcoming) Climate Change Expert Group Global Forum Paris, 16 September 2014 Christopher R. Kaminker Economist – Project Manager OECD Project on Long Term Investors and Green Growth Organisation for Economic Co-operation and Development [email protected]CONFIDENTIAL. This presentation is solely for the use of the intended audience. No part of it may be circulated, quoted or reproduced without prior written approval from the OECD. This presentation represents the views of the author alone and does not represent opinions, estimates or forecasts of the OECD or its member countries. This material was used during an oral presentation; it is not a complete record of the discussion.
Transcript
LESSONS FROM:Institutional Investors and Sustainable Energy Infrastructure: Mapping Channels and Approaches to Mobilise CapitalKaminker, C., K. Eklin, O. Kawanishi and R. Youngman (2014 forthcoming)
Climate Change Expert Group Global ForumParis, 16 September 2014
Christopher R. Kaminker Economist – Project ManagerOECD Project on Long Term Investors and Green GrowthOrganisation for Economic Co-operation and [email protected]
CONFIDENTIAL. This presentation is solely for the use of the intended audience. No part of it may be circulated, quoted or reproduced without prior written approval from the OECD. This presentation represents the views of the author alone and does not represent opinions, estimates or forecasts of the OECD or its member countries. This material was used during an oral presentation; it is not a complete record of the discussion.
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www.oecd.org/env/cc/financing.htm
$83 trillion in assets under management by institutional investors in the OECD (2012)
Note: Book reserves not included. Pension and insurance companies' assets include assets invested in mutual funds, which may be also counted in investment funds.(1) Public Pension Reserve Funds (PPRFs) e.g. Government Pension Fund – Norway or Unites States' Social Security Trust Fund.(2) Other forms of institutional savings include foundations and endowment funds, non-pension fund money managed by banks, private investment partnership and other forms of institutional investors.(3) Source: OECD Large Pension Fund Survey (2013)Source: OECD Global Pension Statistics, Global Insurance Statistics and Institutional Investors databases, and OECD estimates.
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
5
10
15
20
25
30
USD
tril
lions
Investment funds
Insurance companies
Pension funds
Foundations, endowments, etc2
Public Pension Reserve Funds1
1% of pension fund assets invested directly in infrastructure3
An even smaller portion invested directly in green infrastructure
Ensure a stable and integrated “investment grade” policy environment
Provide a national infrastructure road map & pipeline
Facilitate the development of appropriate liquid financing vehicles or de-risking instruments
Promote market transparency, standardisation and improve data on infrastructure investment
Reduce the transaction costs of green investment
Establish a “green investment bank” or refocus existing public finance institutions
Weak & uncertain environmental,
energy and climate policies
Regulatory policies with unintended
consequences
Lack of information and
data to assess transactions and underlying risks
Lack of suitable financial instruments
and funds
7 policy options for addressing the investment challenges and mobilising institutional investment in green infrastructure
Sources: Kaminker, C. et al. (2013), “Institutional Investors and Green Infrastructure Investments: Selected Case Studies”, OECD Publishing, Paris.
12
4
7
910
1112
16
20
23
12
4
67
11
14
0
5
10
15
20
25
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Num
ber of Fund Managers and D
irect InvestorsCu
mul
ative
Fun
ds R
aise
d &
Cum
ulati
ve D
irect
Inve
stm
ents
(€
Mill
ions
)
Cumulative Listed Funds Raised
Cumulative Direct Investment
Cumulative Private Funds Raised
Number of Fund Managers
Number of Direct Investors
Institutional investors increasing in number and capital in EU renewables
EVOLUTION OF EU RENEWABLE POWER SECTOR INVESTMENT (2002 – 2014)
Source: Preqin & HgCapital data in Kaminker, C., et. al (2014 forthcoming) Institutional Investors and Sustainable Energy Infrastructure: Mapping Channels and Approaches to Mobilise Capital,
6
Securities Cash
BondLoan
Infrastructure debt funds (listed and unlisted)
SubordinationWarehousing or pooling
Project bond Mezzanine debtPrivate debt funds (targeting companies)
Loan or performance guarantees
Securitisation
Convertible bond
Special Purpose VehicleInsurance products
Co-investment, joint-venture or consortium
Asset-backed security
Bond fund Currency swapCo-investment platform
Covered bond Exchange Traded FundsPublic seed capital for funds
Mutual FundCornerstone stake
Stock (share)Direct equity stake (unlisted)
Infrastructure equity funds (listed and unlisted)
Insurance product
Pooling
Convertible share
Direct public financing (e.g. equity provision)
Private equity funds (targeting companies)
Performance Guarantee
Co-investment, joint-venture or consortium
Venture capital funds (targeting companies)
Public seed capital for funds
Co-investment platform
Special Purpose VehicleCornerstone stake
Exchange Traded FundMutual FundYieldCo
Securities Cash Funds Tools Techniques
Renewable Energy Credit / Obligation Certificate, etc
Whole unlevered project asset
Renewable Energy Credit Fund
Grant Carbon Credit Fund Carbon Credit Index Fund
Other
FundsFinancial Instruments
Debt
Tools
Carbon Credit
Techniques
Equity
Financial Capital Type
Co-operation and collaboration
Co-operation and collaboration
No public disclosure of pension fund investment in green bond funds available
UN
LIS
TE
D (
Dire
ct)
INT
ER
ME
DIA
TE
DLI
ST
ED
(D
irect
)
PROJECTPURE-PLAY
CORPORATES
CPFL Renováveis
(Previ)
Deb
tE
qu
ityD
ebt
Eq
uity
Deb
tE
qu
ityU
nli
ste
d
Walney (PGGM)
Walney(Ampere LPs)
Boralex(CDPQ)
SolarReserve(CalPERs)
EEW(EQT Infra II LPs]
Invenergy Wind LLC(AMP Capital Infra Debt LPs)
World Bank Green Bonds(Diverse Iis)
Deb
tE
qu
ityL
iste
d
Touwsrivier CPV Plant(South African pension
funds)
NRG Yield(Texas Teachers, CalSTRs)
No public disclosure of pension fund investment in index funds or
ETFs available
No public disclosure of pension fund investment in green bond
funds that include corporate and project bonds available
Cape Wind(PensionDanmark)
Sustainable energy projects have not yet independently
listed on public markets
Westmill(Lancashire County
Pension Fund)
UN
LIS
TE
DLI
ST
ED
A E
C G
D HNo public disclosure of pension fund investment in specific corporate green
bonds available. Many issuances noted to have significant institutional investor
interest such as EDF Energies Nouvelles and Vestas Euro Bond
B F
UK Greencoat Wind Yieldco Deal
UK Green Investment Bank advises on deal and co-invests
UK Dept for BIS provides cornerstone stake in IPO
Greencoat Wind Yieldco pools projects for diversification
Shares invested in by institutional investors
Techniques
Tools
Instruments & funds (matrix)
Project Corporate Pure play
Inte
rmed
.
Unliste
d
Listed Equity
Buys Shares
Institutional Investors
Yieldco (fund) lists on an exchange and issues shares (instrument)
