Fund II will invest into infrastructure in sectors contributing to the energy transition and the environment, including the circular economy.
European sustainable infrastructure investor Pioneer Point Partners has announced the final close of its second fund, exceeding its initial €800m target and reaching a hard cap of more than €1.1bn in commitments.
Pioneer Infrastructure Partners II has attracted a diverse range of institutional investors including public and private pension funds, insurance companies, asset managers, endowments, and foundations in the final fundraising round. This includes Ingka Investments, the investment arm of Ingka Group, the largest franchisee of IKEA retail stores, and the only investor that was publicly named by the fund.
The fund, which launched in March 2024, had previously raised just under €400m at first close in July of the same year.
The London-based investment firm said that the fund’s investors were predominantly from Europe and North America and that over 50% of the capital raised by the fund – excluding contributions from Pioneer’s general partners – came from existing investors of its €575m first fund. This latest funding round also includes investors from previous funding rounds who have increased their allocations.
Investment approach
The fund uses a thematic approach to investment to identify companies in Western Europe operating in sectors supporting the energy transition and the environment, including those contributing to the circular economy.
Speaking to Impact Investor, Harriet Rae, head of investor relations for Pioneer, said that despite a tough fundraising environment, the firm has been able to attract investors thanks to its long-dated experience of investing into the sectors targeted: “We’ve been operating in the energy transition space since 2008 when the firm was founded and some of the partners have worked in the space since the early 2000s. Whilst the energy transition sector is getting a lot more market participants, a lot of them are spin-outs that don’t have a track record.”
Rae explained that in the energy transition space Pioneer looks at sectors and sub-sectors that support the decarbonisation of the economy.
“Without going into a full list of what our target sectors are, I can say that we’re looking at subsectors such as green transport, renewable heat or biogas. The latter we see as a crossover sector as it reuses and recycles organic waste whilst at the same time producing renewable gas which is feeding the energy transition,” she said.
Pioneer was founded in 2008 and prior to launching its first fund in 2020 it invested directly into companies on a deal-by-deal basis.
Adding value in the lower mid-market
Rae explained that Pioneer’s research team used both a top-down and bottom-up approach to identifying sectors and subsectors.
“It’s our way of trying to get in early ahead of the crowd and secure transactions bilaterally. This enables us to be more creative in the investment structuring and unlock hidden value. Pioneer applies a very hands-on approach, applying a private equity style toolkit to infrastructure investments,” she said, explaining that the company targeted firms which could be scaled significantly.
“We do a lot of the heavy-lifting, a lot of platform scaling and construction. We don’t typically buy operational assets to just tweak and improve them. It’s about building companies.”
As a private equity infrastructure investor, Pioneer takes a majority stake in its investments and targets the lower mid-market, which Rae said was less competitive, with ticket sizes ranging between €50m and €100m.
“The lower mid-market is less competitive than the mid-market space which is overcrowded. If you’re competing against other investors, then you can potentially overpay. All of our investments to date have been bilaterally sourced, we rarely get involved in auctions. Our ticket sizes are typically a lot smaller on day one and we scale over time,” said Rae.
Fund II aims to make between 10 and 12 investments and has already completed two investments.
These include Yeager Energy, a Dutch geothermal platform that develops, builds and operates geothermal energy projects for the horticulture and residential sector, and OG Clean Fuels, a European clean fuel filling stations platform. Pioneer has also signed a third investment that is scheduled to be completed at the end of Q2 2025.
