Infrastructure Debt Fund
The Australian Ethical Infrastructure Debt Fund returned 2.2% net of fees for the quarter, outperformaning against its benchmark by 1.1%.
Performance was driven primarily by income from the Fund's underlying loans and securities. The benchmark, the RBA’s Cash Rate Target, rose 25 basis points in September to reach 4.6%, bringing the total increase for the year to 75 basis points. This reflects continued pressure from renewed inflation concerns.
During the quarter, the Fund committed to two new investments, including a solar farm in New Zealand, diversifying the Fund’s exposure to underlying infrastructure projects to 50 in total.
The Fund aims to support projects that deliver positive social and environmental outcomes alongside a financial return. Projects funded by loans within the portfolio generated over 230,000 megawatt hours of clean energy and helped avoid over 120,000 tonnes of carbon emissions, which is the equivalent to powering more than 170,000 households for the 3 months to 30 June 2026.1
In electricity markets, wholesale prices continued to remain subdued, averaging $63.26/MWh across the National Electricity Market. The combination of increasing renewable supply and flexible battery capacity continued to place downward pressure on prices which is consistent with our forecasts. In the medium to near term, until coal power plants shut, we do not expect wholesale electricity prices to rebound. We continue to maintain our investment discipline and structure loans accordingly, with over 70% of the portfolio’s project revenues being contracted.
Overall, the portfolio continues to perform within expectations, with no loan payments in arrears and over 75% of the portfolio in operating phase.
Infrastructure Debt Fund performance
As at 30 September 2026
| Fund (gross) | Fund (net) | RBA Cash | Excess returns (net) | |
|---|---|---|---|---|
| 1 Month | 1.10% | 1.08% | 0.38% | 0.70% |
| 3 Months | 2.26% | 2.17% | 1.09% | 1.08% |
| 6 Months | 4.49% | 4.31% | 2.15% | 2.16% |
| 1 Year | 8.53% | 8.17% | 4.07% | 4.13% |
| Since Inception P.A. | 7.99% | 7.63% | 4.12% | 3.52% |
* Inception date: 1/2/2024. Past performance is not a reliable indicator of future performance.
New investments
- Lightyears Solar Portfolio. The investment is a senior secured loan to the Lightyears Solar Portfolio of five solar farms across New Zealand’s North and South Islands and will initially include approximately 55 MW of distribution-connected solar capacity. The projects are being developed and operated by Lightyears and benefits from long-term contracted revenues with investment-grade corporate customers, providing strong offtake support and diversifying the merchant risk exposure of the overall portfolio. The investment provides geographic diversification for the Fund and exposure to a market where solar penetration remains relatively low and hydro generation dominates the electricity mix. The Lightyears Solar portfolio is expected to displace higher-emissions thermal generation, particularly during dry years, and reduce approximately 66,000 tonnes of CO₂ emissions annually.
- Powow EMC. The investment is a senior secured loan to finance a portfolio of greenfield Energy Management Contracts (EMC) with Australian local councils. Under the contracts, Powow installs and owns behind-the-meter solar and battery systems across eligible council buildings and provides a bundled, fixed-price energy supply arrangement, targeting approximately 90% of annual site electricity demand from on-site generation. Powow operates as part of the broader GTL/Powow Group, a vertically integrated energy platform spanning equipment procurement, system installation, energy retailing and power purchase agreement (PPA) structures. The investment provides the Fund with exposure to distributed energy infrastructure backed by long-term contracted cashflows from local government counterparties and complements our existing loan with GTL Renewables (related entity) which is secured against a separate pool of residential rooftop solar PPAs and related receivables. The transaction reflects the benefits of long-term borrower relationships and being a lender of choice as borrowers’ capital needs evolve.
| Investment statistics | Portfolio loans | Duration (yrs) | Effective maturity (yrs) |
|---|---|---|---|
| Current portfolio | 22 (50) | 0.13 yrs | 2.5 yrs |
Project updates
- The portfolio continues to perform within expectations, with no credit downgrades or breaches of covenants to report. Last quarter we reported that two projects had breached loan covenants due to low merchant revenues. These issues were resolved during the quarter (and just after) via substantial loan paydowns. Following these paydowns, there are no loans with covenant breaches across the portfolio.
- While the Fund had no direct exposure to the recently liquidated Zen Energy (renewables focused electricity retailer), one borrower in the portfolio had electricity purchase agreements for some of its generation with Zen Energy. The borrower is presently in the process of finding new customers to replace the Zen Energy contracts. Overall, the loan to this borrower (which includes a portfolio of eight projects) has relatively low leverage and so this, combined with the customer replacement strategy being executed, leaves us comfortable with the credit in respect to this loan.
- Over 75% of the portfolio is in the operating phase, with the exception of the Fulham Solar Hybrid project, a bolt-on expansion of an asset within the Bright Energy Investments portfolio, and the new loan to the Lightyears Solar Portfolio in New Zealand.
During the quarter the Fund committed to two new investments, one of which is a solar farm in New Zealand, diversifying the Fund’s exposure to underlying infrastructure projects to 50 in total.
Projects funded by loans within the portfolio generated over 230,000 megawatt hours of clean energy and helped avoid over 120,000 tonnes of carbon emissions.
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.
- 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.
- Lightyears Solar Portfolio. A construction portfolio of five solar farms across New Zealand’s North and South Islands including ~55 MW of distribution-connected solar capacity.
- Powow EMC. A portfolio of greenfield Energy Management Contracts with Australian local councils.
Portfolio holding weights
| Investment | Weight (%) |
|---|---|
| Fullham Solar Hybrid | 19% |
| Bright Energy Investments Portfolio | 15% |
| RELA | 11% |
| Yarranlea Solar Farm | 9% |
| Prime Renewables Portfolio | 7% |
| Bouldercombe Battery | 7% |
| Sentient Solar Asset Portfolio | 6% |
| Green Squares Energy Portfolio | 5% |
| Cash | 4% |
| GTL Renewables | 4% |
| Evie Networks | 3% |
| GGP Portfolio | 3% |
| Ark Energy Portfolio | 2% |
| Royal Women's Hospital | 2% |
| NSW Schools II (2031) | 2% |
| Australian National University | 1% |
| Darwin Cove Convention Centre | 1% |
| NSW Schools II (2035) | 1% |
| AE Altius Credit Income Fund | 0% |
| IMA Interest Rate Hedging Assets | 0% |
| Lightyears Solar Portfolio | 0% |
| Powow EMC | 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.
This information has been prepared by Australian Ethical Investment Ltd (ABN 47 003 188 930, AFSL 229949) (Australian Ethical) in its capacity as trustee of the Australian Ethical Infrastructure Debt Fund (ABN 78 283 158 021) (Fund) and is intended solely for Wholesale Clients as defined in sections 761G and 761GA of the Corporations Act 2001 (Cth).
This information is general in nature and is not intended to provide you with financial advice and does not take account of your individual investment objectives, financial situation or needs. The information is provided in summary form and may be subject to qualifications. Prospective investors should rely upon their own enquiries and seek such professional advice as they consider appropriate before deciding whether to invest in the Fund. Past performance is not a reliable indicator of future performance.
Before acting on the information, visit australianethical.com.au for our Financial Services Guide (FSG) and the Fund’s Information Memorandum (IM) to consider its appropriateness to your circumstances. You should read the IM in full entirety and consider consulting with a financial adviser or tax adviser. An investment in the Fund should be considered in the context of the risks outlined in the IM. Australian Ethical has appointed Infradebt Pty Ltd ABN 54 162 814 495, AFSL 438 986 (Infradebt) as a specialist investment manager for Australian infrastructure debt assets for the Fund and has agreed to be included in this commentary.
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.
Our investment restrictions include thresholds and other tolerances that vary depending on the investment. We apply both qualitative and quantitative analysis when making investment decisions and may invest where we believe the positive aspects outweigh the negative. From time to time, we may use derivatives that provide temporary exposure to a broad market index, such as the S&P/ASX 200. This does not involve direct investment in, or ownership of, the underlying companies. For more information, please read our Ethical Guide.
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.