Montreal’s Desmarais family and a group of financial institutions have launched a $1-billion investment fund to buy into solar and wind energy projects in the latest show of Canadian financial might for the renewable sector.
The sustainable energy unit of Power Corp., the family holding company, has partnered with Desjardins Group, Great-West Lifeco, National Bank of Canada and Switzerland’s Après-demain SA to seek out investments in Canada and the United States. The new fund, called Power Sustainable Energy Infrastructure Partnership, aims to invest the money over the next 24 to 36 months.
The fund is an offshoot of Power Sustainable Capital Inc., which has put some of its assets into the partnership to start, although it has other potential targets in its sights. Power Sustainable has investments around the world, and one of its companies, electric vehicle manufacturer Lion Electric Co., made headlines earlier this month when it was disclosed that Amazon.com Inc. secured the right to buy almost 16 per cent of the company while taking delivery of its trucks.
The fund’s creation shows how sustainable energy investment and the push to cut carbon emissions have shifted from government policy-directed endeavours to economic opportunity, said Pierre Larochelle, co-managing partner. Power Sustainable’s expertise in renewables will allow the fund to compete in an environment where billions of dollars from institutional investors, including major pension funds, are flowing into the industry, he said.
“I think finally the world is getting behind the shift to decarbonization, which obviously, for people who have been believing in this and investing in this for a decade, it’s great and we’re pretty excited,” Mr. Larochelle said in an interview.
“We invest in what we do because not only do we believe we can generate good returns and good performance for our owners, at the same time we do believe in being active participants and investors in the fight against climate change.”
He said Desjardins was a preferred partner from the start because of its own experience investing in renewables across Canada and understanding of the risks.
The move, championed by Olivier Desmarais, chairman and chief executive of Power Sustainable, comes amid a flood of investment in green energy by big-name institutions. Late last year, Brookfield Asset Management set up an impact fund led by former central banker Mark Carney that could eventually be worth as much as US$100-billion. Canada Pension Plan Investment Board expanded its $9-billion renewables business by setting up a European investment arm.
“This is a landmark moment for Power Sustainable, and the first of several projects we intend to bring to the sustainable investment marketplace in the coming years,” Mr. Desmarais said.
Although not dependent on government moves, the fund is expected to benefit from the Trudeau Liberals’ carbon tax as it accelerates the shift to more sustainable power generation and battery storage projects to stabilize electricity grids for less-continuous supply, Mr. Larochelle said. In the U.S., the incoming administration of president-elect Joe Biden also promises more adoption of renewables as it proceeds with plans to re-enter the Paris Agreement on fighting climate change, he said.
Power Sustainable owns New Jersey-based Nautilus Solar Energy LLC, which operates community solar projects in North America. Power has also vied to be involved in wind projects in Alberta and Saskatchewan.
With the global rush to sustainable investing, an asset-value bubble could be forming, and Mr. Larochelle said the fund’s success will come from finding its niche in the market and using in-house financial and technical expertise. It will seek deals in the $25-million to $100-million range. Meanwhile, community solar projects can be completed for about $5-million.
“When you in-source all those capabilities, you’re able to move fast and focus your capabilities. Then you can make those deals,” he said.
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Jeffrey Jones