Infrastructure Debt Fund
The Australian Ethical Infrastructure Debt Fund (the ‘Fund’) returned 7.9% net of fees for the year, delivering 4.0% outperformance against the benchmark return of 3.8%. Performance was driven predominantly by income from its underlying loans and securities, while the Fund’s benchmark of RBA’s Cash Rate Target increased 50bps to 4.35%, following renewed inflation concerns. During the year the Fund committed to three new investments and one exit, increased its allocation to two existing investments, and refinanced another, diversifying the Fund’s exposure to underlying infrastructure projects to 44 in total.
The Fund has a specific objective of supporting Australian projects that generate positive, measurable social and environmental impact alongside a financial return. Projects funded by loans within the portfolio generated over 1.3 million megawatt hours of clean energy and helped avoid over 615,000 tonnes of carbon emissions, which is the equivalent to powering more than 235,000 households for the 12 months to 31 March 2026.1
Wholesale electricity prices were on average lower in FY2026, compared to the prior year, due to the continued rollout of renewable energy and battery storage projects, and as aging coal-fired generators continue to remain online, according to the Australian Energy Market Operator (AEMO) data. This price movement has long been anticipated, but will eventually correct itself in the medium to long-term. In the meantime, we ensure our portfolio is well diversified, across generation types and regions, with projects exposed to merchant pricing underwritten with conservative leverage levels and protective design features like tight debt service coverage ratios, rapid amortisation and review events linked to tight covenants.
Overall, the portfolio continues to perform within expectations, with no loan payments in arrears. However, there were four loans that breached their covenants over the year related to lower electricity prices which we have been actively engaging the borrower to remedy (see Project Updates section for more information). All projects within the portfolio are in operating phase, except for the Fulham Solar Hybrid project and a bolt-on expansion of an asset within the Bright Energy Investments portfolio.
Infrastructure Debt Fund Performance (net of fees)
As at 30 June 2026
| Fund | RBA Cash | Excess returns | |
|---|---|---|---|
| 1 Month | 0.8% | 0.4% | +0.5% |
| 3 Months | 2.1% | 1.0% | +1.0% |
| 6 Months | 4.2% | 2.0% | +2.2% |
| 1 Year | 7.9% | 3.8% | +4.0% |
| Since Inception P.A. | 7.5% | 4.1% | +3.4% |
Inception date: 1/2/2024. Past performance is not a reliable indicator of future returns.
New investments
- Bright Energy Investments Portfolio is a portfolio of four wind and solar assets in the main grid of Western Australia, one of which is currently undergoing expansion. The Fund has an existing exposure to this portfolio but has increased its allocation during the year. The portfolio is majority (80%) owned by Enel, an Italian utility. The remaining 20% of the portfolio is owned by Synergy, a West Australian state-owned energy generator and retailer. The portfolio consists of 259 MW of operating assets and another 108 MW wind farm under construction. The portfolio has a long-term offtake with Synergy and Water Corporation Western Australia that covers 100% of generation. This loan diversifies the merchant risk exposure of the overall portfolio and provides geographical, sector and offtake diversification benefits to the portfolio.
- NSW Schools II are CPI-linked bonds that finance the design, construction, and maintenance of 11 schools in NSW under a private partnership (PPP), with revenue underpinned by an availability payment from the NSW government. These bonds deliver attractive inflation-linked cash flows and enhance diversification away from renewables sectors. The Fund increased its allocation during the year across different bond tenors issued by NSW Schools II.
- Prime Renewables is a portfolio of wind and hybrid solar-battery projects in managed by PATRIZIA, a global real assets investment manager. The facility refinances five equity-funded operational wind assets and supports the acquisition of an additional five new hybrid solar-battery projects. The portfolio is diversified across generation technologies, revenue structures, and offtake counterparties, and is aligned with Victoria’s 95% renewable energy target by 2035. In addition to emissions-free electricity generation, the addition of battery storage creates opportunities to capture value from Frequency Control Ancillary Services (FCAS) and energy arbitrage markets.
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National Renewable Network (NRN) is a company that provides behind-the-meter solar and battery solutions to residential customers. The combination of rooftop solar and residential batteries offer a cost-effective way of delivering renewable energy directly to customers in line with their underlying user patterns. They reduce the need for transmission and distribution networks. Furthermore, the embedded batteries provide energy retailers the flexibility to dispatch stored energy as needed. The NRN product lowers the barrier to entry requiring no upfront expenditure, enabling customers to see immediate savings on their energy bills. The purpose of the senior debt facility was to provide financing for operational residential systems within the NRN portfolio, which act as security against the facility. While the loan was originally written in Aug-2025, the fund exited its position in April when the loan sold to another lender.
- Evie Networks is the owner and operator of Australia’s largest electric vehicle DC fast-charging network. The company has a network of over 1,000 charging bays across more than 320 sites in all Australian states and territories. With fast-charging being a nascent sector, the loan provides further diversification and strong risk-adjusted returns.
| Investment statistics | Portfolio loans | Duration (yrs) | Effective maturity (yrs) |
|---|---|---|---|
| Current portfolio | 20 | 0.3 yrs | 2.7 yrs |
Project updates
- The portfolio continues to perform within expectations, with no payments in arrears during the period. Loans written by the fund typically incorporate covenants into the loan agreements, which are designed to provide early warnings of potential future underperformance and ensure projects are capitalized with an appropriate level of debt. During the period, four loans in the portfolio breached their loan covenants, due to subdued electricity and Large-scale Generation Certificate (LGC) prices.
- Out of the four loans, one has been exited with full repayment of all principal and interest. Of the remaining three loans, we have actively engaged the borrowers to remedy the covenant breaches including, restricting distributions to equity investors (to provide additional cash security to lenders), a potential sale or refinance of the portfolio, mandatory debt paydowns (to deleverage/ derisk the position) and establishment of cash reserves account to fund battery development (to improve the revenue profile of the project).
- In addition, due to subdued merchant electricity price outcomes, the internal credit rating of a battery storage loan was downgraded though no covenants were breached. The loan benefits from low leverage and a strong equity sponsor, and we believe it remains a strong credit.
- All projects within the portfolio are in the operating phase, except for the construction of the Fulham Solar Hybrid project and and the bolt-on expansion of one asset within the Bright Energy Investments portfolio, both of which remain on track, with no risks of concern or reported cost overruns.
- The portfolio saw an early loan repayment of NRN due to low take up of its residential solar/battery offering.
- The portfolio refinanced its debt facility with RELA, allowing it to support three additional concurrent solar farm leases across Queensland and New South Wales.
We increased our investment in NSW school CPI-linked bonds which finance the design, construction, and maintenance of 11 schools in NSW, with revenue underpinned by the NSW-private partnership (PPP) sector.
We ensure our portfolio is well diversified… with conservative leverage levels and protective design features like tight debt service coverage ratios, rapid amortisation and review events linked to electricity generation and prices.
Investments in the portfolio
The Fund consists of a portfolio of loans including:
- Bright Energy Investments Portfolio. A portfolio of three renewable projects in the Western Australian (Greenough River Solar Farm 40MW, Warradarge Wind Farm 180MW, and Albany Grasmere Wind Farm 35.4MW).
- Yarranlea Solar Farm. A 134 MW solar farm in Yarrenlea, Queensland (100km west of Brisbane).
- Sentient Solar Asset Fund Portfolio. A portfolio of three solar farms throughout Australia (Swan Hill Solar Farm 19.3 MW, Chinchilla Solar Farm 19.9MW and Brigalow Solar Farm 34.6MW).
- RELA. Portfolio of renewable concurrent leases in NSW and Queensland.
- Dulacca Wind Farm. A 181MWac wind farm in Drillham, Queensland (300km west of Brisbane).
- Ark Energy NT Solar Portfolio. A portfolio of five solar farms in the Northern Territory (Utene Solar Farm 4.1 MW, Yulara Solar Farm 1.8MW, TKLN Solar Farm - Lake Nash 272KWac, TKLN Solar Farm - Ti Tree 323KWac, TKLN Solar Farm – Kalkarindji 408KWac).
- Royal Women's Hospital. Australia’s first and largest specialist public hospital dedicated to improving the health and wellbeing of women and newborns, located in Parkville, Victoria.
- Bouldercombe Battery. A 50MW/100MWh stand-alone battery energy storage system in Rockhampton, Queensland.
- Darwin Convention Centre. The Northern Territory’s largest conference and event facility, catering for up to 1,200 delegates.
- New South Wales Schools II. A portfolio of ten schools across New South Wales. The schools include seven primary schools, two high schools and one special needs school.
- GTL Renewables. A portfolio of over 2,000 solar and battery power purchase agreement systems located across the east coast of Australia. Under the arrangements, solar and battery equipment is provided to households for a fixed monthly fee over 10 years, with the option for customers to make their home batteries available for grid load balancing and stabilisation services.
- GGP Solar Hybrid Portfolio. A portfolio of three hybrid solar and battery projects with a combined solar capacity of 15MW and 15MWh of battery capacity.
- Green Square Energy Trust Portfolio. A portfolio of behind-the-meter solar PPAs with commercial and industrial users across Australia, as well as two solar farms, 3.6 MWac Chillamurra Solar Farm in Queensland and 5.0 MWac Cosgrove Solar Farm in Victoria.
- Fulham Solar Hybrid. A hybrid 107MW solar farm coupled with a 78MW two-hour battery energy storage system located in Fulham, Victoria.
- Prime Renewables. A portfolio of five operating wind projects and five hybrid solar-battery projects throughout Victoria.
- Evie Networks. Australia’s largest electric vehicle DC fast-charging network with a network of over 1,000 charging bays across more than 320 sites throughout Australian.
Portfolio holding weights
| Investment | Weight (%) |
|---|---|
| Bright Energy Investments Portfolio | 15% |
| Fullham Solar Hybrid | 13% |
| RELA | 11% |
| Yarranlea Solar Farm | 9% |
| Prime Renewables Portfolio | 7% |
| AE Altius Credit Income Fund | 7% |
| Bouldercombe Battery | 6% |
| Sentient Solar Asset Fund Portfolio | 6% |
| Green Square Energy Trust Portfolio | 5% |
| GTL Renewables | 5% |
| Cash | 3% |
| Evie Networks | 3% |
| GGP Portfolio | 3% |
| Ark Energy Portfolio | 2% |
| Royal Women's Hospital | 2% |
| NSW Schools 2 (2031) | 2% |
| Australian National University | 1% |
| Darwin Cove Convention Centre | 1% |
| NSW Schools 2 (2035) | 1% |
| IMA Interest Rate Hedging Assets | 0% |
| Other assets and liabilities | 0% |
1 Reported figures are at the asset level and do not reflect the Fund’s proportional exposure to each project via debt financing, as projects may be funded through a combination of debt and equity. It is also assumed the average residential customer consumes 5.5MWh of electricity a year. Impact data lags the fund reporting period by 3 months.
Interests in the Australian Ethical Managed Funds are issued by Australian Ethical Investment Ltd (ABN 47 003 188 930, AFSL 229949), the Responsible Entity of the Australian Ethical Managed Funds.
The information is of a general nature and is not intended to provide you with financial advice or take into account your personal objectives, financial situation or needs.
Before acting on the information, consider its appropriateness to your circumstances and read the Financial Services Guide, relevant Product Disclosure Statement, Target Market Determination and Information Memorandum available on our website.
You may wish to seek financial advice from a licensed financial adviser before making an investment decision.
Past performance is not a reliable indicator of future performance.
Investing ethically and sustainably means that the investment universe will generally be more limited than non-ethical, non-sustainable portfolios in similar asset classes. This means that the portfolio(s) may not have exposure to specific assets which over or underperform over the investment cycle, and so the returns and volatility of the portfolio(s) may be higher or lower than non-ethical, non-sustainable portfolios over all investment time frames.
The information contained in this document is believed to be accurate at the time of compilation.
This document may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, the Australian Ethical accepts no responsibility for the accuracy or completeness of, nor does it endorse any such third party material. To the maximum extent permitted by law, we intend by this notice to exclude liability for this third party material.
The Australian Ethical Infrastructure Debt Fund is managed by specialist investment manager Infradebt Pty Ltd who has agreed to be included in the commentary.
1 Reported figures are at the asset level and do not reflect the Fund’s proportional exposure to each project via debt financing, as projects may be funded through a combination of debt and equity. It is also assumed the average residential customer consumes 5.5MWh of electricity a year. Impact data lags the fund reporting period by 3 months.