Climate-friendly investments attracted much positive attention in 2020
More and more funds are committed to reporting on the impact of their portfolio
Six new investments added to the Impact Investing portfolio
A new employee in place and the Impact Investing team consists of two people from January 2021
Climate-related investments attracted a lot of attention and benefitted from favourable conditions in 2020. In the political arena, the fight against climate change was in focus. The EU Green Deal will help make the EU climate neutral by 2050. One of the tools for achieving this is the EU taxonomy, intended to ensure that more capital is allocated to sustainable projects and activities. Similarly, China announced a target of becoming carbon neutral by 2060, and Joe Biden has put forward a plan for the USA to achieve the same by 2050.
The supportive political framework is contributing to strong growth in ‘green’ industries, such as renewable energy, energy storage and electric vehicles. The capital markets show increasing demand for environmentally friendly companies and projects, and 2020 was a record year for green companies.
We are also seeing a high level of activity among early-stage environmentally friendly companies. Companies of this type have become more committed to communicating their positive impact, such as explaining which of the UN’s Sustainable Development Goals they help address. This also applies to managers of seed and venture funds.
While only a few of the fund managers we met in 2019 reported their portfolio’s impact, this is now becoming more and more common.
The majority of asset managers and investors agree that delivering a positive impact helps strengthen financial returns.
In 2020 Ferd Impact Investing focused on creating a good platform for its investment mandate. We invested in four different and complementary fund structures, which invest in renewable energy, proptech and aquaculture. We have also established good collaborative relationships with their managers, and we will consider co-investing with them in the time ahead. We also made two investments related to wind power, a sector in which Ferd as a whole has significant positions and ambitions going forward.
- Antler found it necessary to digitalise its business in 2020 due to Covid-19, and this acted as a small speed bump in the company’s rapid growth. Still, 126 new companies were founded with support from Antler in 2020 across eight locations on five continents. A number of new locations are ready to start in 2021. Antler’s broad portfolio contained over 250 companies at the end of 2020 and it has so far delivered a good financial return. In addition to its ongoing regional funds, Antler has launched a large global fund that can make follow-up investments in the best companies in Antler’s broad portfolio. All of Antler’s companies address at least one of the UN’s Sustainable Development Goals, and Antler’s portfolio has the potential to deliver a significant positive impact as its companies grow. Antler has produced a video that describes its impact.
- The Ecosystem Integrity Fund IV (EIF IV) in San Francisco held a successful funding round in 2020 and invested in four portfolio companies. These companies are Energicity (solar-energy-based mini-grids in Africa), VeriCool (environmentally friendly packaging), ThinkIQ (Industry 4.0) and ZeroAvia (hydrogen-based aircraft engines). We expect the fund to make a similar number of investments in 2021.
- Momentum II is a Bergen-based venture fund that invests in sustainable, innovative and ambitious companies that are in an early growth phase. The fund has a particular focus on ocean industries. Momentum II completed a first close in autumn 2020, with Farvatn, Investinor and Ferd as the biggest investors. The fund invested in NoFence at the end of 2020. NoFence is a Norwegian grazing technology company that has launched the world’s first virtual fence system, which helps make grazing more efficient and sustainable. We expect Momentum to make a number of exciting investments in 2021.
- Wind Catching Systems (WCS) is developing a ground-breaking concept for floating offshore wind, designed for all weather conditions with the potential to produce electricity at a significantly lower LCOE (Levelized Cost of Energy) on a significantly smaller area than other technologies known today. Aibel AS – a company in Ferd Capital’s portfolio – and the Norwegian Institution for Energy Technology are WCS´main partners for the technology development process. Ferd has invested in WCS in partnership with North Energy ASA.
- NeXtWind is building a portfolio of older land-based wind farms in Germany with the ambition of either replacing the old turbines with new and more efficient turbines (repowering) or extending the lives of the existing turbines (life extension). As such, the company increases the renewable energy production capacity of wind farms while reducing the LCOE. The NeXtWind team has extensive experience in renewable energy and finance, both as founders and senior executives at European power companies.
- Arkwright X Investment Family (AXIF) is expected to make its first investments in 2021. AXIF invests in B2B seed-phase tech start-ups that have profitable business models and the ability to make a positive contribution to the UN’s Sustainable Development Goals. AXIF is industry/sector agnostic, but is particularly interested in proptech, professional services, energy, mobility, fintech and food production. Ferd was involved in setting up AXIF, and is the first program investor together with Investinor.
Ferd Impact Investing will continue to invest in funds, companies and other partnership structures that deliver both a positive impact and a solid financial return. We will also follow our established investments and help them to make good progress. The team has doubled in size, and from January 2021 comprises two people.