The Norwegian private equity firm’s climate impact fund has received backing from a broad range of investors, and will focus on innovative technologies that improve the efficiency and sustainability of value chains, it says.
Private equity investor Verdane has closed its second impact fund at €700m. The fund will invest in decarbonising the economy.
The Idun II fund, which more than doubled the size of its €300m predecessor fund Idun I, will focus on areas of energy transition and resource efficiency.
The Article 9 fund has the backing of investors including the European Investment Fund, Norway’s state climate investment fund Nysnø Climate and Banque de Luxembourg.
Other investors include global private and public pension funds, university endowments, foundations, insurance companies and family offices, with the majority of commitments coming from non-profit organisations and investors that benefit a broad segment of society, Verdane said.
Idun II is the firm’s second fund close this year, following its Edda III fund, which focused on investments in firms that further digitalisation and decarbonisation in Europe.
Climate metrics
Speaking to Impact Investor, Erich Becker, partner of the decarbonisation team at Verdane said that his overall focus is on innovative technologies and business models which improve the efficiency and sustainability of value chains, rather than investing directly in large infrastructure assets.
“We look for companies that lead to carbon avoidance or removals such as processing plants which are converting waste into valuable recycling for example,” Becker said.
“It is very important to understand the supply side of these companies and what they are actually doing in terms of their processes as regards to Scope 1, 2 and 3 emissions,” added Becker.
Among the key metrics Verdane uses to evaluate investments is the requirement for a carbon equivalent reduction of at least 5,000 tons of CO2 per million euros invested.
In addition to this decarbonisation metric, Verdane developed a label known as the “2040 test”, which assesses how likely a company is to thrive in a more sustainable economy in 2040, Becker said.
Current holdings from the first Idun fund include NORNORM, which enables businesses to reduce their greenhouse gas emissions through its office furniture subscription model and Scanbio, a producer of fish protein concentrates and fish oils that focuses on the upcycling of waste and allows businesses to reduce their use of resource-intensive commodities.
Looking ahead, Bjarne Kveim Lie, founder and managing partner of Verdane, said: “With Idun II, we seek to demonstrate that it is possible to generate world-class returns for investors while making a meaningful contribution to the decarbonisation of our economy. As structural growth investors, we are convinced that the quest to decarbonise is a generational megatrend.”
