Video transcript

Keenen: My name's Keenan, I'm joined today by Adam Roberts, our Head of Private Markets. Adam, it's great to have you here.

Adam: Thanks for having me.

Keenan: So we're 12 months since we launched our Infrastructure Debt Fund. What have been some of the highlights for you?

Adam: I think we've been very pleased with the first 12 months of the fund, it's delivered at the top end of its target range, it's delivered a 7.1% net return* for investors. The portfolio is diversified, there's 15 loans and from an impact perspective, it's delivering renewable energy to the equivalent of 350,000 houses. So that's about 10 to 15% of Queensland or Victorian homes.

Keenan: Awesome. And can you give us some examples of some of the projects you've invested in?

Adam: The latest loan that we've written is to a hybrid battery and solar farm, which provides some flexibility to capture energy and distribute it into the network. The project itself has a ten year power purchase agreement from the Victorian government, so we really like that from a stability of revenue perspective. It's got a fixed price and a variable volume contract. And another example that's a little bit different, is financing homes to meet the energy transition through financing of their rooftop solar and their battery storage. So we've got a portfolio of about 2000 homes. We’re able to then take the capital need away from them upfront and they're able to repay those loans over a ten year period.

Keenan: So, Adam, there's been a lot of volatility in markets not just in equities, but also in corporate lending and private credit. How does infrastructure debt compare?

Adam: Private credit is a pretty broad asset class and it can capture a lot of different things. Infrastructure debt is certainly at the lower risk, lower return component of the private credit sector. And we really like that because it fits really neatly into people's portfolios. So through these times of volatility, our loans have continued to perform very well. As we mentioned earlier, they quite often have a long term power purchase agreement. As a lender, you're taking the first tranche of cash flow as it comes out of the businesses and so we've not seen any issues across the portfolio to date. They're very high quality projects and not withstanding the noise that's happening in broader markets we continue to see these assets performing really well.

Keenan: Nice, thank you. So Adam was saying the US walk back from its climate commitments. Are you seeing any follow on impacts in the Australian market and how might it affect deal flow?

Adam: Not withstanding what we're seeing overseas, renewables continue to be the lowest cost of energy in Australia, as we're getting toward half way of our net zero commitments, there's still another 70 billion or so of capital required. About half of this will be debt and half of this will be equity. So we can really see quite a healthy pipeline over the next few years, and we look like we can continue to meet or exceed our return targets.

Keenan: Adam, that's exciting to hear about the pipeline for the future. I’m looking forward to seeing how the fund evolves over the next 12 months. Thank you very much for your time today, it's been great to hear your insights.

Adam: Great, thanks, Keenan.

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* To March 31, 2025. Past performance is not an indication of future returns.

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 in this video 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 and Target Market Determination available on our website.

You may wish to seek financial advice from an authorised tax or financial adviser before making an investment decision. Past performance is not a reliable indicator of future performance.