Thermion Energy Fund I
Last updated 12 May 2020, by Impactyield.
Thermion Energy Fund I makes investments in low-carbon power projects in wind, solar, and natural gas that promote the use of cleaner and renewable energy in Mexico.
The fund will allocate no more than 10% at any point in time to assets under development. The fund manager operates as an independent power producer focused on developing, acquiring, financing, constructing, owning and operating low carbon power projects with stable long-term cash flows. We combine power industry and investment expertise, strategic partnerships and rigorous risk management to deliver attractive returns to our investors by focusing on wind, solar and natural gas power production facilities.
Attractive risk/reward: We aim to offer uncorrelated and stable assets to investors in their flight to quality and more certainty. We focus on capital preservation, 8% cash yield and target net IRRs of 20%.
Strong pipeline: We currently own and expect to complete the acquisition of project interests such that we may own interests in power projects representing over 1GW of rated capacity.
ESG: We seek to implement rigorous fund governance and will be compliant with the IFC Standards for ESG. Our investments in clean energy are beneficial to the local and global environment and may provide cheaper access to power to private companies, institutions and local communities.
We aim to offer uncorrelated and stable cash-flow generating assets to investors in their flight to quality and more certainty.
Our financial objectives are (1) capital preservation, (2) delivering 8% cash yield, and (3) meeting our target 20% net IRR to investors.
Key performance indicators
Asset manager: Thermion Energy
Product track record: Fund has 9 years of track record
Target IRR: 20%
Committed Capital: 100,000,000 USD (US Dollar)
Target return category: Risk-adjusted market-rate of return
Product status: Open - committed capital
Inception year: 2014
Vintage year: 2015
Target close date: 01/12/2016
Product term: 10
Assets under management: 500,000,000 USD (US Dollar)
Investment size: Min: 0; Max: 100,000,000; Avg: 40,000,000
Currency of investments: USD (US Dollar)
Currency for fund / product figures: USD (US Dollar)
Fund investments to date: 5
Fund investments to date exited or repaid: 0
Management fee: 1.5%
Carried interest: 20%
Hurdle rate: 8%%
GIIN Investors' Council Investment: No
Limited Partners / Investors: 60% institutional, 20% DFI, 20% HNWI/family offices
Limited Partner / Investor Type: Development Finance Institution (DFI), Endowments/Foundations, Family Office, Pension Funds, Other Institutional Investors
Thermion will be compliant with the IFC Standards for ESG. Select impacts in Mexico:
(1) Promote use of renewable resources: Reducing GHG emissions is a major challenge for Mexico which is the 13th largest GHG emitter in the world and has the weakest progress in the OECD in decoupling CO2 emissions from economic growth. Mexico was the only OECD country where CO2 emissions grew faster than real GDP growth during 2000-2010, which can be explained in part by significant energy generation capacity depending on fossil fuel. Mexico has abundant availability of renewable resources of which only approximately 7% is being used. We expect about 80-90% of our portfolio to be renewable with the remainder low-carbon.
(2) Catalyze economic development: High cost of energy is an important factor keeping productivity in Mexico low. Most companies are faced with unpredictable and relatively high costs of electricity. We support the economic and productivity growth prospects of Mexico by providing low-cost, renewable and low-carbon power supply solutions to private companies operating in Mexico.
(3) Catalyze social development: Mexico's middle class is expected to grow from 31% of the population in 2010 to 47% by 2025, which is an increase of 27 million people representing a growth of more than a 75%. Access to cheaper power should help drive this growth, and this growth should in turn drive increased electricity demand. Our investments will support this dynamic.