Business

Family-owned alternative energy pioneer backs cleantech fund

Family-owned engineer IB Vogt, which pioneered Germany’s solar power movement, is backing a plan by UK-based Aura Power to raise capital for a new generation of clean energy and battery facilities. 

Aura Power has set up a company called Aura Sustainable Capital Investment to take charge of the initiative.  It is currently planning to tap the market by launching an investment trust.  Longer term, Aura Sustainable is likely to develop co-investment opportunities for family offices.

IB Vogt is run by Anton Milner and Dagmar Vogt, a husband-and-wife team.  Milner is best known for developing Q-Cells, a solar venture started in 1999, which achieved rapid growth over the following decade. Like other clean energy developers, Q-Cells hit problems due to the credit crisis of 2008 and cuts in government subsidies. Milner left the board and Q-Cells was subsequently bought out of bankruptcy by Hanwha of Korea.

Milner went on to join IB Vogt, his wife’s engineering company, started in 1991, which has expertise of its own in solar. IB Vogt has developed solar projects generating 1.15 gigawatts, with 5 gigawatts in the pipeline.

In 2020, IB Vogt confirmed that the family was interested in selling their business. Talks are said to be continuing. According to bankers, it could be looking for between $500 million and $700 million, taking into account the growing demand for clean energy. Milner would not want to be caught in another downturn and Dagmar Vogt has developed other interests, including the development of Yeguada La Pasión, a dressage and horse-riding facility in Spain’s Andalusia region.

IB Vogt is a long-standing partner with Aura Power, founded in 2013, in the development of solar and battery projects. Batteries are perceived as a growth area, given the role they can play in containing power surges and dips in the electricity grid during times of uneven supply. They can also boost the supply of electricity available to the grid during periods of high demand.

In the past, Aura Power has sold clean energy developments to investors such as BlackRock and Allianz Capital. It was founded by Simon Coulson, Martyn Tuffs and Ben Moore. Anton Milner is on the board. Christian Yates, who has connections in the wealth and renewables sectors, is director of the new initiative. 

The creation of Aura Sustainable is likely to lead to a co-investment model in a position to take advantage of investor appetite for clean energy and batteries. The newly published IPCC report on climate change, published by the United Nations, says solar and wind projects need to quadruple over the next decade to achieve zero carbon targets by 2050. 

Industry data suggests investors in Aura’s proposed investment trust could see an internal rate of return close to 13%, generating a net return of 10% including a dividend yield of 4%. 

Solar and battery deals are viewed as impact opportunities, as opposed to ESG funds defined in different ways by asset managers whose underlying purpose is to win new clients. According to Bloomberg, sustainable assets currently total $35 trillion but $25 trillion comprise funds where managers incorporate ESG factors in their process and do not always feel obliged to use them. 

As the climate emergency develops, more money is likely to be directed into impact projects, rather than poorly defined ESG. This suggests Aura’s projects could rise in value, while offering a steady return. Tim Hodgson, senior consultant at Willis Towers Watson goes further and says renewables could overhaul bonds, over time, to become the world’s next “risk-free” asset.

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