HASI and KKR Establish $2 Billion Strategic Partnership to Invest in Sustainable Infrastructure Projects

Rhea-AI Summary

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) and KKR have established a $2 billion strategic partnership to invest in climate positive projects in the U.S. through CarbonCount Holdings 1 (CCH1). Each company has committed up to $1 billion to CCH1 for clean energy assets over 18 months. HASI will manage CCH1, measure emissions, and focus on renewable energy projects. The partnership aims to accelerate the energy transition and reduce reliance on public equity markets.

Positive

• HASI and KKR have formed a strategic partnership to invest $2 billion in climate positive projects.

• The agreement includes an initial capital commitment of up to $1 billion from both HASI and KKR for clean energy assets.

• HASI will manage CCH1 and measure avoided emissions using its CarbonCount® scoring tool.

• The partnership aligns with HASI's investment strategy focused on renewable energy projects.

• KKR's expertise in infrastructure investing and renewable energy enhances the partnership.

Negative

• None.

Insights

Financial Analyst

The strategic partnership between Hannon Armstrong Sustainable Infrastructure Capital, Inc. and KKR to pool up to $2 billion in sustainable infrastructure projects could potentially diversify investment portfolios and enhance shareholder value. The significant capital commitment suggests a bullish perspective on the sustainable infrastructure sector. This move aligns with HASI's Climate Clients Assets strategy, likely to enhance the company's ability to capitalize on its pipeline of opportunities and scale its business. Additionally, transitioning to a 'capital light' model reduces reliance on public equity markets, which may improve the company's financial resilience. Investors should monitor how effectively HASI manages the new entity, CCH1 and whether their proprietary CarbonCount tool provides a competitive edge in reporting and efficiency.

Sustainability Investment Expert

This partnership reflects a growing trend in sustainable investment and could signal prospects for growth in the clean energy sector. HASI's experience in originating investments and KKR's substantial renewable energy portfolio combine to enhance the capabilities in accelerating the energy transition. Notably, environmental, social and governance (ESG) considerations are increasingly important to investors and HASI's proprietary CarbonCount scoring tool positions the company as a leader in ESG measurement and reporting. This partnership may provide a unique value proposition to investors interested in sustainable infrastructure investments with a clear environmental impact.

Energy Market Analyst

The collaboration between HASI and KKR is a strategic maneuver within the energy transition space, which is witnessing an uptick in demand for renewable and sustainable energy solutions such as behind-the-meter projects, grid-connected assets, renewable natural gas and transport projects. Given that HASI will manage the investments and measure their avoided emissions, the effectiveness of their proprietary CarbonCount scoring tool in assessing and communicating the impact of these investments will be crucial. The investment strategy's alignment with the ongoing trend towards renewable infrastructure indicates potential for growth and market share gain in this segment.

ANNAPOLIS, Md. & NEW YORK--(BUSINESS WIRE)-- Hannon Armstrong Sustainable Infrastructure Capital, Inc. ("HASI," "we," "our" or the "Company") (NYSE: HASI), a leading investor in climate solutions, and KKR, a leading global investment firm, today announced an agreement to establish CarbonCount Holdings 1 LLC (“CCH1”) to invest up to a combined $2 billion in climate positive projects across the United States.

Per the agreement, signed May 4, 2024, HASI and KKR have each made an initial capital commitment of up to $1 billion to CCH1, to invest up to an aggregate of $2 billion in clean energy assets over the next 18 months. HASI will source the investments for and manage CCH1, remain the interface with its clients, and measure the avoided emissions of all investments in CCH1 using its proprietary CarbonCount® scoring tool. These investments will be consistent with HASI’s existing investment strategy which is focused on behind-the-meter, grid-connected, renewable natural gas and transport projects.

At close, CCH1 will be seeded with assets representing approximately 10% of the up to $2 billion total committed amounts.

“Our strategic partnership with KKR perfectly aligns with our Climate Clients Assets strategy, enabling us to capitalize on our ambitious pipeline of opportunities and scale our business,” said Jeffrey A. Lipson, President and Chief Executive Officer of HASI. “We are excited to collaborate with the KKR team, who share our commitment to accelerating the energy transition and whose interest in the relationship serves as a testament to HASI's history of success.”

“CCH1 represents a significant milestone in our objective to migrate to a more capital light model and reduce reliance on public equity markets for growth,” said Marc Pangburn, Chief Financial Officer of HASI. “This transaction further increases the resilient, non-cyclical nature of our business.”

“HASI has built an impressive portfolio of sustainable infrastructure projects through strategic partnerships and we believe their pipeline of future opportunities is highly complementary to KKR’s existing clean energy investing strategy,” said Cecilio Velasco, Managing Director on KKR’s Infrastructure team. “We look forward to working together to advance projects in the sustainable infrastructure space and accelerate the energy transition.”

With over 15 years of experience in infrastructure investing, KKR has invested more than $15 billion in renewable energy and climate-related investments from its infrastructure platform alone. According to BloombergNEF, KKR is the 10^th largest owner of solar assets operating and under construction in the U.S. KKR is funding the investment from its core infrastructure strategy.

Morgan Stanley & Co. LLC acted as the financial advisor for KKR, and Lazard acted as financial advisor for HASI.

CarbonCount: Measuring the Climate Impact of Every Investment

HASI only invests in assets that are neutral to negative on incremental carbon emissions or have some other tangible environmental benefit, such as reducing water consumption. Since 2013, HASI has tracked and reported on the impact of all its investments utilizing CarbonCount, a proprietary scoring tool for evaluating real assets to determine the efficiency by which each dollar of invested capital avoids annual carbon dioxide equivalent emissions (CO2e). This first-of-its-kind methodology promotes transparency in project finance by creating a simple and comparable metric for infrastructure projects to be evaluated in terms of how much capital investment is mitigating climate change.

About HASI

HASI (NYSE: HASI) is a leading climate positive investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. With more than $12 billion in managed assets, our vision is that every investment improves our climate future. For more information, please visit hasi.com.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.

Forward-Looking Statements

Some of the information contained in this press release is forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that are subject to risks and uncertainties. For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expressions, we intend to identify forward-looking statements.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements include those discussed under the caption “Risk Factors” included in our most recent Annual Report on Form 10-K as well as in other periodic reports that we file with the U.S. Securities and Exchange Commission

Forward-looking statements are based on beliefs, assumptions and expectations as of the date of this press release. We disclaim any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this press release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240507075158/en/

For HASI

Conor Fryer

media@hasi.com

443-321-5754

Neha Gaddam

investors@hasi.com

410-571-6189

For KKR

Liidia Liuksila or Emily Cummings

media@kkr.com

(212) 750-8300

Source: Hannon Armstrong Sustainable Infrastructure Capital, Inc.