HSBC hits €117m for 1st close of green infrastructure fund
London, 30 April: HSBC has raised €117 million ($156 million) of a targeted €500 million into its Environmental Infrastructure Fund.

The fund – managed by HSBC Specialist Investments, the UK-based bank's infrastructure and real estate investment unit – will invest in the development and construction of infrastructure, using proven commercial technologies in renewable energy, water treatment and waste management. The fund will focus primarily on Europe, North America and other OECD countries.

The fund was announced last March (see Environmental Finance, April 2008, page 6), but marketing began only last summer, with institutional investors from the UK and the Middle East so far committing to the vehicle.

A source close to the fund said that “marketing has been difficult”, given economic conditions, but said that the team is pleased to have reached the first close and is confident of reaching the target size. A further close is expected this summer, with a final close within 12 months.

The fund managers are aiming for an annual gross internal rate of return for investors of over 20%.

The fund’s announcement last March coincided with its first commitment, of £18 million ($27 million) of seed investment into the fund from HSBC, to take a 49% stake in Partnerships for Renewables. That company, a joint venture between the fund and the UK's Carbon Trust, was created to develop and build 500MW of renewable energy generation on land owned by the public sector in the UK.