KGAL klimaSUBSTANZ Fund to be Dissolved Amid Market Challenges

KGAL GmbH & Co. KG has announced the planned dissolution of its open infrastructure fund, KGAL klimaSUBSTANZ, effective 28 September 2026. This decision comes as the fund faces challenges in attracting new subscriptions, which are deemed necessary for its long-term viability and portfolio diversification.

Background of the Fund

Launched in November 2023, KGAL klimaSUBSTANZ was designed as an open infrastructure special asset for private investors, with an initial capital of approximately €12.5 million. The fund primarily invested in two operational renewable energy facilities located in Schleswig-Holstein, Germany. These facilities include a wind farm and a solar park, both of which have been performing according to expectations.

Reasons for Dissolution

Michael Kohl, Head of Packaged Products at KGAL, stated that the primary reason for the dissolution is the lack of sufficient new subscriptions to enable the fund to grow to a financially viable size. The market environment has shifted significantly since the fund’s inception, with a notable decline in demand for sustainable investment products. Furthermore, rising interest rates have made traditional investments, such as fixed deposits and bonds, more appealing to investors.

Kohl emphasised that the decision to dissolve the fund was made to provide clarity to investors rather than prolonging the fund’s operations in the hope of a market recovery. He noted that while there have been some requests for redemptions, these have not been significant enough to influence the decision.

Current Status of Investments

The two renewable energy facilities within the fund are progressing as planned. The wind farm, located near Lübeck, comprises two wind turbines with a total capacity of 9.6 megawatts and has been operational since June 2025. It benefits from a guaranteed minimum remuneration for the electricity generated over a 20-year period. Similarly, the solar park Eiderstede, which has a capacity of 14.2 megawatt-peak, commenced operations in October 2024 and has secured its revenue through a fixed-price purchase agreement with a municipal utility for the same duration.

KGAL’s Commitment to Investors

KGAL has a significant investment in the fund, aligning its interests with those of the investors. This co-investment strategy aims to maximise the sale outcomes for all stakeholders involved. The timing and proceeds from the eventual sales of the renewable energy assets will depend on future market conditions, making it difficult to predict the total returns for investors at this stage.

Options for Investors

As part of the dissolution process, KGAL is offering investors the opportunity to exchange their shares in KGAL klimaSUBSTANZ for shares in the open real estate fund KGAL immoSUBSTANZ at net asset value. Details regarding this exchange offer will be communicated to investors through their distribution partners.

Conclusion

The dissolution of KGAL klimaSUBSTANZ highlights the challenges faced by investment funds in the current economic climate, particularly those focused on sustainable energy. As the market evolves, investors are encouraged to stay informed about their options and the potential impacts on their investments. KGAL continues to manage its portfolio with a focus on delivering stable returns while navigating the complexities of the investment landscape.

KGAL GmbH & Co. KG, established in 1968 and headquartered in Grünwald near Munich, is a leading independent investment and asset manager with a managed investment volume exceeding €15 billion. The firm focuses on long-term real capital investments for institutional and private investors across various sectors, including real estate, sustainable infrastructure, and aviation.