Australian Ethical teams up with specialist manager for infrastructure debt fund

Ethical asset manager Australian Ethical has launched an infrastructure debt fund in association with specialist Infradebt.

The Australian Ethical Infrastructure Debt Fund will provide capital for key Australian projects spanning renewable energy, social infrastructure, and property projects with a social or environmental benefit.

Chief investment officer Ludovic Theau said the fund will be at the forefront of capital deployment into Australia’s renewable energy transition. This includes loans to the Yarranlea Solar Farm, to implement solar and battery projects in remote communities, and stand-alone battery projects such as the Genex Bouldercombe in Queensland.

Infrastructure debt specialist Infradebt has already funded more than 40 renewables projects and said infrastructure debt typically offered stable and predictable cash flow and diversification as well as a way to hedge market volatility and inflation.

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“We estimate that debt capital will provide 50–60 per cent of the total capital expenditure that’s required to meet Australia’s renewable energy transition targets,” he said.

“Given Australia is aiming to increase its renewable energy generation from 39 per cent today to 82 per cent by 2030, Australian Ethical considers its expansion into infrastructure debt as an important growth opportunity that will serve a dual purpose – of delivering good risk-adjusted returns and contributes towards meeting these targets.

“This partnership with Infradebt, also a leader in its field, allows us to bolster our investment capabilities by bringing in-depth expertise across new asset classes.”

Infradebt investment director and co-founder Alex Ramsey said: “We’re pleased to be partnering with Australian Ethical on a product that will be integral to building Australia’s green transition. The energy transition is of paramount importance to our community, it will be complicated and challenging, and the fund will allow investors to access the requisite investment capability to participate and make a meaningful contribution.”

Announcing its quarterly results last month, the firm said its funds under management are approaching $10 billion after seeing net flows of $145 million in the three months to 31 December.

FUM was $9.6 billion, up by 5 per cent from $9.2 billion in the previous quarter. This was divided between $2 billion in managed funds and $7.6 billion in superannuation.

However, managed funds saw net outflows of $7 million, which the firm attributed to “cautious investor sentiment relating to broader market volatility”.