The new fund gives investors the chance to invest in proven infrastructure projects, ranging from hydrogen to biogas production facilities, primarily in Europe.
Amsterdam-based Carbon Equity, an investment platform for private market climate investments, has raised €10m from existing investors for a new fund focused on investing in climate infrastructure projects aimed at CO2 reductions.
Carbon Equity intends to grow the fund to €50m. It is now open to a wider audience, with a second close likely by the end of the year. Since its inception in 2021, the firm has raised more than €260m from 900 investors on its platform.
The launch of the new fund was driven by two factors, Jacqueline van den Ende, co-founder and chief executive officer of Carbon Equity, told Impact Investor.
“There is the insight that infrastructure is another very important part of the energy transition, which we need to invest heavily in,” Van den Ende said.
Safer assets
Talking to existing investors, Carbon Equity also found there was “a very clear interest in slightly safer assets, with more of a fixed return profile, compared to pure equity investment”, via its climate tech portfolio funds, Van den Ende said.
In return for a minimum investment of €100,000, investors in the new fund get exposure to new and existing infrastructure projects like hydrogen and biogas production facilities, solar parks, sustainable transmission systems, EV charging stations, and battery storage systems.
“Investing in technologies, especially venture and growth, is relatively high-risk, with a high return profile,” Van den Ende said, adding the climate infrastructure fund offers investors more diversification on its platform.
Carbon Equity’s fund will invest in three to five infrastructure funds, ranging from €500m to €2.5bn in size, given investors access to 40 to 50 energy transition projects, mainly within the European Union.
The platform’s climate tech portfolio funds typically invest in seven to ten private equity and venture capital funds, each ranging from €100m to €1bn in size, across more than 150 climate innovations in both the EU and the US.
As the new infrastructure fund is investing in projects that are rolling out proven technologies “the capital raised is deployed more quickly than in climate innovations” Van den Ende said.
Lower risk and return profile
But while the risks are still “significant”, they are lower “than those associated with investing in climate innovations, resulting in a lower expected return,” Van den Ende said.
The annual internal rate of return of the Climate Tech Portfolio Fund III lies between “10 and 15%” compared with “10% to 12%” for the new infrastructure fund, Van den Ende said.
“Investing in infrastructure may not be as exciting as emerging innovations, but it is equally necessary and complements venture capital and private equity in addressing climate challenges comprehensively,” Van den Ende said.
