$3.95bn IFM Investors fund to support net-zero opportunities

Industry super-backed IFM Investors will create a specialised $3.95bn net-zero vehicle to cater for a surge in ­demand by institutional backers for low-carbon opportunities.

IFM Investors head of infrastructure Kyle Mangini: ‘There is going to be an unprecedented investment opportunity, including investments in renewable energy, electrification and renewing energy systems.’ Picture: Sarah Matray

One of the nation’s largest fund managers, industry super-backed IFM Investors, will create a specialised $US3bn ($3.95bn) net-zero vehicle to cater for a surge in ­demand by institutional backers for low-carbon opportunities.

The fund will cater to investors that have a specific net-zero mandate and will back infrastructure projects in electrification, carbon capture and solar power.

“It’s a way for investors to invest in low-carbon opportunities,” said IFM Investors head of infrastructure, Kyle Mangini.

“We will be actively acquiring assets by the end of the financial year,” he said, adding that the pressure for green investments was coming from institutional investors around the world.

“We engage with hundreds of large, institutional investors globally,” he said. “In virtually every market, carbon reduction is not just an issue, it is becoming the single biggest issue for some.

“It’s not a factor, for some investors these days it is almost the only factor.”

In an outlook report to be released on Thursday, IFM said the global move to decarbonise was driving an unprecedented level of investment in infrastructure.

IFM’s infrastructure portfolio now has $80bn in assets – more than half of the fund manager’s $150bn total.

“There is going to be an unprecedented investment opportunity, including investments in renewable energy, electrification and renewing energy systems,” Mr Mangini said on Wednesday.

“The targets set by governments and businesses (to move to net zero emissions by 2050) are intensifying the pressure to take more immediate action.”

Owned by 22 funds, IFM has become one of the world’s largest investors in infrastructure with assets in more than 20 countries.

Mr Mangini said there were investment opportunities to cater for the big increase in demand for electricity expected to power the growth in electric vehicles.

“Electricity demand is estimated to increase by 40 per cent over the next 10 years alone just on the back of the move to electric cars,” he said. “There are entire fleets which need to be supplemented by … electricity transmission and distribution.”

Mr Mangini said there were “no borders” when it came to the global push to decarbonise economies. “Carbon doesn’t care about borders,” he said.

The move to green energy was also driving investment in infrastructure, IFM’s outlook noted.

“With many of the world’s largest airlines announcing commitments to increase their take-up of sustainable aviation fuels, long-term success requires a step change in the level of co-operation between airlines, airports, government and fuel producers,” the report reads. IFM’s green energy investments include working with Manchester Airport to develop sustainable aviation fuel produced at a new biofuels refinery.

IFM also has a stake in Melbourne airport, which has just completed a 12 megawatt solar farm on 19ha of airport land – the largest solar farm at any Australian airport.

The solar farm is expected to generate up to 15 per cent of the airport’s annual electricity consumption.

The report says leading technology companies have sought to reduce their carbon footprint by installing renewables on their premises or through power purchasing agreements for energy generated from renewable sources, creating opportunities for investment in infrastructure.

The report says Russia’s invasion of Ukraine, and the associated global spike in fuel prices, has seen governments – particularly in Europe and the UK – looking more closely at energy security.

“The geopolitical imperatives for developing renewable energy have become clearer,” it says.

“Industry commentators have flagged the potential for these events to provide a catalyst in accelerating investment in the net zero transmission.”

IFM has been investing in renewable infrastructure since its controversial bid for then ASX-listed Pacific Hydro in 2005, which it purchased after a battle with a Spanish company.

It sold the company, which had renewable energy assets in Australia, Chile and Brazil, for more than $3bn to China State Power in December 2015.

“While governments are committing to increasing amounts to sustainable infrastructure to reach the level required, IFM believes the private sector has a long-term role to play,” the report reads. “This infrastructure is a critical pillar and the foundation to achieving a net zero economy.”