The strategy aims to close the €30bn funding gap that’s threatening to slow down the energy and circular transition in the Netherlands.
ASN Impact Investors and StartGreen Capital have launched a new climate investment strategy with three investment funds that will focus on local and regional projects that struggle to access financing, as the Netherlands enters the next stage of the energy transition.
Both parties are rolling out the strategy in phases, with a climate impact equity fund being introduced now. Climate impact funds for junior debt and senior debt will follow later this year. ASN and StartGreen aim to grow the strategy to between €500m and €1bn in size.
“By offering flexibility in three different asset classes, we can help realise a large and broad group of projects in the Netherlands and at the same time appeal to a broad group of professional investors. We invest exclusively in proven technologies that are ready for scaling up, with mostly predictable returns,” said Rosemarijn van der Meij, strategy manager at ASN Impact Investors.
Since its foundation in 1993, ASN Impact Investors, a unit of Dutch state-owned lender Volksbank, has invested in firms that can produce both financial returns and make a positive contribution to climate change, biodiversity and human rights. It managed €4.1bn in assets at the end of last year.
“This particular strategy will fit into our sustainable pillar of climate. All of these investments will contribute to bringing a fair and sustainable society closer without using fossil fuels and depleting resources. We’re aiming to finance projects that will accelerate the energy transition and promote the transition to a circular economy in the Netherlands”, Van der Meij told Impact Investor.
The production of clean energy from solar and wind energy in the Netherlands has advanced so much that the sustainable transition is entering a new, critical phase with a greater need for local investments in the generation, distribution and storage of energy.
Funding gap
Although local and regional energy projects often have proven and scalable technologies, they struggle to access financing because they are relatively small-scale, require a high level of expertise and are deemed high risk by some commercial lenders, according to Van der Meij. In fact, these projects may face a funding gap of around €30bn until 2030, both parties said.
ASN and StartGreen hope their climate impact strategy, which will be investing in projects including grid management, battery technology and green hydrogen, circular production, EV infrastructure and energy efficiency of buildings, can help bridge that gap.
“We typically invest through bilateral deals, where we are the sole investor and where our ticket sizes of €5m to €15m and our structuring expertise can add specific value. However, for larger-scale projects, we will also be able to participate in club deals,” Van der Meij said.
ASN Impact Investors is aiming for a net internal rate of return between 8.5% and 9.5% for the strategy, based on a holding period of at least five years and taking into account the relatively low risk profile of the underlying projects, Van der Meij said.
Momentum
“The momentum for local projects is enormous. The Netherlands must become CO2 neutral as soon as possible. We must also make the country less dependent on foreign, fossil energy as soon as possible,” said Erhan Yildiz, investment director of Amsterdam-based StartGreen Capital, which manages close to €500m across four funds and three themes: energy transition, diversity and circularity.
The climate strategy’s investment thesis is also supported by the Dutch government and the European Commission implementing measures to stimulate the development of, and investments in, essential energy technology, Yildiz said.
As previously reported by Impact Investor, StartGreen Capital in February became an investment advisor to ASN Impact Investors, taking over the portfolio management of its ASN Energy & Innovation Fund.
