HPS Investment Partners and Enhanced Capital Launch Innovative Partnership to Invest in Energy Transition Projects

Rhea-AI Summary

HPS Investment Partners and Enhanced Capital have announced a strategic partnership to provide structured capital solutions for renewable energy and battery energy storage projects across the United States. The collaboration aims to simplify tax credit monetization without complex tax equity structures, leveraging provisions from the Inflation Reduction Act (IRA) of 2022. The partnership combines HPS's renewable energy investment expertise with Enhanced Capital's tax credit structuring capabilities to support economy-wide decarbonization goals.

Positive

• Strategic partnership enables simplified tax credit monetization for renewable energy projects
• Leverages IRA provisions for improved capital access in renewable energy sector
• Combines complementary expertise in renewable energy investment and tax credit structuring

Negative

• None.

Insights

Financial Analyst

The partnership between HPS Investment Partners and Enhanced Capital represents a strategic move to capitalize on the Inflation Reduction Act's tax credit transfer provisions. This initiative could significantly streamline renewable energy project financing by eliminating complex tax equity structures, potentially accelerating project development timelines and reducing transaction costs.

The platform combines HPS's substantial capital resources with Enhanced Capital's tax credit expertise, creating a competitive advantage in the rapidly growing renewable energy financing market. While specific investment amounts aren't disclosed, the partnership's focus on structured capital solutions for renewable energy and battery storage projects positions it well to capture market share in the expanding energy transition sector.

Energy Market Analyst

The timing of this partnership is strategically aligned with the massive growth potential in renewable energy infrastructure. The IRA's transferable tax credit provision has created a more efficient pathway for project financing, potentially unlocking billions in renewable energy investments. By simplifying the monetization process, this partnership could accelerate the deployment of renewable energy projects, particularly benefiting smaller developers who previously struggled with traditional tax equity structures.

The focus on battery energy storage is particularly noteworthy, as this sector is important for grid stability and renewable energy integration, with projected significant growth in the coming years.

NEW YORK, Oct. 31, 2024 /PRNewswire/ -- HPS Investment Partners and Enhanced Capital announced today the launch of a new partnership between funds managed by HPS Investment Partners and Enhanced Capital that will provide structured capital solutions for renewable energy and battery energy storage projects throughout the United States. These investments will provide catalytic capital to energy transition projects while simplifying the monetization of renewable energy tax credits without the need for complex tax equity structures.

The Inflation Reduction Act (IRA) passed in 2022 contained several provisions aimed at improving access to capital and reducing barriers to the deployment of renewable energy and energy storage assets to support economy-wide decarbonization goals. As part of the legislation, Investment Tax Credits and Production Tax Credits became eligible for a one-time transfer to third parties, creating a new avenue to monetize tax credits outside of tax equity financings. The new platform combines HPS Investment Partners' track record of investing in renewable energy and infrastructure businesses and assets with Enhanced Capital's expertise in tax credit structuring and monetization.

"We are pleased to partner with Enhanced Capital to offer comprehensive capital solutions for developers who are actively enabling the energy transition across the country," said Michael Dorenfeld, Managing Director at HPS Investment Partners. "With this commitment, we are bringing together HPS credit investment expertise with Enhanced Capital's capabilities accessing and funding tax credits across industries."

"For over two decades, Enhanced Capital has been financing projects with immediate and lasting impacts on communities and the environment," said Ed Rossier, Managing Director at Enhanced Capital. "The HPS partnership will significantly expand our renewable energy and battery storage financing for developers across the country."

About HPS Partners

HPS Investment Partners, LLC is a leading global, credit-focused alternative investment firm that seeks to provide creative capital solutions in order to generate attractive risk-adjusted returns for our clients.  HPS manages various strategies across the capital structure, including privately negotiated senior debt; privately negotiated junior capital solutions in debt, preferred equity and equity formats; liquid credit including syndicated leveraged loans, collateralized loan obligations and high yield bonds; asset-based finance and real estate.  The scale and breadth of HPS's platform offer the flexibility to invest in companies large and small, through standard or customized solutions.  HPS has approximately $117 billion of assets under management as of June 2024.  For more information, please visit www.hpspartners.com.

About Enhanced Capital

Enhanced Capital Group, LLC is a leading impact investment firm with over 24 years of experience investing in Climate Finance, Impact Real Estate, and Small Business Lending.

From inception in 1999 through June 30th, 2024, inclusive of proprietary assets and assets managed by affiliates, Enhanced Capital has raised a total of $6.0 billion. Of the total assets under management, impact assets represent $3.8 billion invested in over 950 projects and businesses throughout 40 states, Washington DC, and Puerto Rico and does not include investments made by non-impact affiliates.

Enhanced Capital is committed to investing in four main impact themes: Underserved Communities; Underrepresented Populations; Environmental Sustainability; and Community Development Programs. Enhanced Capital is a subsidiary of P10, Inc. (NYSE: PX), a diversified, multi-asset investment platform. For more information, please visit https://enhancedcapital.com.

Enhanced Capital Disclaimer

Enhanced Capital Group, LLC, and its affiliates, is an Equal Opportunity Provider. The information presented is for discussion purposes only and is neither an offer to sell nor a solicitation of any offer to buy any securities, investment product, or investment advisory services. This is not an offering or the solicitation of an offer to purchase an interest in a fund.

CONTACT: info@enhancedcaptial.com

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SOURCE Enhanced Capital

FAQ

What is the purpose of the HPS Investment Partners and Enhanced Capital partnership?

The partnership aims to provide structured capital solutions for renewable energy and battery storage projects across the United States, while simplifying tax credit monetization without complex tax equity structures.

How does the Inflation Reduction Act (IRA) support this partnership's objectives?

The IRA enables Investment Tax Credits and Production Tax Credits to be transferred to third parties, creating new opportunities for tax credit monetization outside traditional tax equity financings.

What expertise do HPS Investment Partners and Enhanced Capital bring to the partnership?

HPS Investment Partners brings expertise in renewable energy and infrastructure investment, while Enhanced Capital contributes experience in tax credit structuring and monetization.