Lok Capital, a nascent new energy asset management platform in China, on Wednesday, announced the first close of its maiden fund, for which it targets to raise 2 billion yuan ($275.6 million) in total.
Officially launched in November 2023 in southern China’s Guangzhou City, Lok Capital counts China’s venture-backed PCG Power and GLP Capital Partners (GCP), GLP’s exclusive global alternative asset manager, among its shareholders.
It is arguably the first asset management firm in China to specialise in distributed energy resources (DERs), which refer to small-scale energy resources usually situated near sites of electricity use. Common examples of DERs include rooftop solar panels, wind turbines, biomass generators, battery storage, electric vehicles (EVs), and EV chargers.
Asia-Pacific is currently the world’s largest regional DER market, followed by Europe and North America. In China, the market has grown for six consecutive years to surpass 250 million kilowatts, or 250 gigawatts, of installed DER capacity in 2022, according to a May report by Chinese consultancy Huajing Intelligence.
The industry is viewed as a crucial part of Beijing’s goals to reach the country’s carbon emissions peak before 2023 and achieve carbon neutrality by 2060. Boosted by government initiatives, more capital is flowing into the space, including a 1.5-billion-yuan ($206.7 million) strategic investment in Nio Power from China’s state capital investors earlier this month to help the firm grow its network of EV charging and battery-swapping facilities.
State-owned power generation groups also play a part in accelerating the growth of DERs. A more recent example is China Southern Power’s plan to earmark 8 billion yuan ($1.1 billion) this year for investments in photovoltaic (PV) and wind power DERs.
Lok Capital is looking to manage “the entire life cycle of DERs from asset development and operations to income generation and exits,” said the firm in a statement.
It looks to partner with Shanghai-based PCG Power, which focuses on developing and operating new energy projects, for deal sourcing in the DER space. Founded in 2022 and incubated by China’s Poly Capital and Country Garden Venture Capital, PCG Power has closed four funding rounds with almost 1.5 billion yuan ($206.7 million) raised.
Lok Capital’s new energy fund will be managed by its controlling shareholder GCP, which had $126 billion in total assets under management (AUM) across 61 funds by the end of 2023.
Through the first close of its maiden fund, Lok Capital secured commitments from a group of limited partners (LPs) in China and globally, including high-net-worth individuals (HNWIs), energy corporates, asset management companies, and China’s local state capital investors, said the firm.
The new fund is already in the market making investments, with the first batch of its pipeline deals including commercial and industrial DER infrastructures in the PV and wind power sectors. It aims to build a portfolio of new energy assets worth an estimated 10 billion yuan ($1.4 billion) through the first fund.
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