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Zouk Capital’s Massimo Resta on the CIIF, investors and the looming final close

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The Charging Infrastructure Investment Fund (CIIF) has made another step forward, with the announcement of the second close earlier this week and a £40 million private investment matched by government investment.

Speaking to Current±, Zouk Capital’s infrastructure partner Massimo Resta said the company was “delighted” by the investment, which was anchored by the Church Commissioners in England.

“They are an institutional investor, they are very sensitive to the ESG theme that is very important to us and we believe that, considering their strength and their experience, the fact they have chosen to invest in the CIIF is a testament to the validity of our investment thesis,” he added.

The £40 million will be matched by the government, giving £80 million to add to the first close’s £70 million, announced last September. This investment was raised from a £35 million input from UAE renewables investment group Masdar, matched by the government.

Resta said he remains confident that Zouk will find more investors for the final close, which is due by the end of the year.

“We believe that investors are generally speaking very interested in the proposition,” he said. “They buy into the long term trend of the electrification of transport, and they understand the importance of the infrastructure in underpinning the electrification of transport and the need to take position today. So I think in general, they are quite receptive.”

The CIIF is designed to raise £400 million to help act as a “catalyst” for EVs in the UK, building chargers and geographical coverage to facilitate their use across the country.

The UK government has committed to match £200 million of private investment to facilitate this, with Zouk appointed by the Treasury to manage the investment fund in early 2019.

However, with the latest close, this gives Zouk a further £125 million to raise by the end of the year.

But when asked by Current± whether this short timescale was of concern to the investment manager, Resta said: “No, I don't think so, it's quite typical to see the final closes are larger than the initial rounds, just because of the nature of investors. Most investors prefer to come in when the picture is clear. This has been our experience, so I'm not particularly concerned about that.”

The maiden investment was announced alongside the first close last September, with finance going to charger company Instavolt to roll out 3,000 rapid chargers.

At the time, this caused a certain amount of controversy, with many criticising the choice as Zouk is the largest shareholder in the charging company. As such, it was criticised with then Labour shadow business secretary Rebecca Long-Bailey saying the company didn’t need deals between private companies, it needed real investment.

When asked if this had put off investors however, Resta said: “Not at all, because it wasn't a controversy - at least from my point of view.

“Instavolt was part of our bid to become the manager of these assets and we followed the process like everybody else. All the investors that are coming into the fund are able to scrutinize the investments that we already made, and the ones that we want to make. So for them, it shouldn't have any impact. Actually, generally speaking, investors like to see seed assets.

Following this week’s update, Zouk has £275 million of total signed commitments to help the UK transition to a more electrified transportation network.

Resta lauded the “massive opportunity” within the sector, identifying transport alongside electricity generation and heat as the sectors that needed to decarbonise quickly in the UK is to meet it’s 2050 net zero target.

“Now power generation has already been on the path to decarbonisation, with the shift to renewable energy,” he said. “The decarbonisation of transportation, which essentially means the electrification of transportation, is probably the major challenge that needs to be tackled. And if you consider that there 40 million cars today, by and large on the road in the UK. And of course, beyond the UK in general, you know, there are 30/35 million cars in Italy and similar numbers in all the major countries in Europe. I think the opportunities are massive.”

The CIIF is designed to help both consumers and private companies benefit from this transition through working together, in a model that Resta described as similar to the Green Investment Bank.

To truly transition, the country must overcome “bottlenecks” of which infrastructure is one, he finishes.

“The other bottleneck is obviously the availability of cars, but we know that the major O&M have all embraced the transition to electric vehicle. There are more than 300 billion being invested by the major O&Ms in the world into the shift to electric vehicles.”

Editorial

Molly Lempriere Deputy Editor, Current±

Molly Lempriere is deputy editor at Solar Media, responsible for its UK-facing publications Solar Power Portal and Current±.

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