The Belgian fund received support from both private and public European investors to back small and medium-sized businesses and scale-ups that focus on lowering greenhouse gas emissions.
Junction Growth Investors, the Antwerp-based long term sustainable investment fund, announced the first close of its first investment vehicle at €115m, after making seven investments.
The fund attracted investment from Ireland-based climate investment firm Keeling Capital, Belgium-based BNP Paribas Fortis Private Equity, the European Investment Fund, Belgian private equity firm PMV, and the Belgian Growth Fund.
Junction was also backed by a number of well-known technology entrepreneurs from Belgium as well as several large family offices, including some of the owners of drinks and brewing giant AB-Inbev and metals recycler and battery materials producer Umicore.
The Article 9 fund was co-founded in 2022 by a small group of Belgian entrepreneurs, former CEOs and investment professionals within the energy transition. Since then, it has made investments in firms active in grid enhancing technologies, business-to-business installers of photovoltaic systems with energy storage, sustainable buildings and others.
The fund surpassed its original €100m fundraising target despite what it called a “highly challenging funding environment”, and has decided to stay open “as we felt [there is] further interest from parties which needed more time”, Pieter-Jan Mermans, managing partner at Junction, told Impact Investor.
Mermans said the fact that they are a first-time fund means they are often subject to a high level of diligence. “Nonetheless, our differentiating team capabilities, combined with having additional proof points in place with the investment into our seven current portfolio companies led to a total fund size being significantly above our initial ambition,” he said.
Ross Madden, partner at Keeling Capital, said that Junction’s expertise in building and scaling energy businesses makes them “an ideal partner” to shift the energy transition into a higher gear.
“Their hands-on approach, industry knowledge, and extensive network will enable portfolio companies to build some of the most scalable and commercially successful, asset-light climate solutions in Europe,” he said.
Plugging the funding gap
Junction provides equity and buyout capital to European energy transition scale-ups and SMEs, a segment it said still lacks funding and needs accelerating at scale. “We prefer to see businesses with multi-million euros in revenue or (real) annual recurring revenue,” Mermans said. He added Junction’s “sweet spot” is investment tickets between €5m and €10m.
According to the 2024 European Climate Investment Deficit report, an annual average investment of at least €813bn, or 5.1% of European gross domestic product, is needed across various sectors for the European Union to deliver on its 2030 climate and decarbonisation targets. Investments reached €407bn in 2022.
The fund said each portfolio company will work with Junction’s management team to find feasible pathways to net zero. The fund will also set KPIs, specific to each company.
Merman said the firm breaks down targets into intermediary steps across five-year timelines to avoid “the risk of inertia”. KPIs relate to ESG management and sustainability impact.
Investments
Firms in Junction’s current portfolio include Belgium-based Ampacimon and Portugal-based Eneida, which both produce technologies capable of making power grids more efficient. Eturnity, based in Switzerland, provides software solutions for installers, wholesalers, and manufacturers active in renewable energy systems while Austria-based EET produces a smart plug-in home battery system for renters wanting to cut their energy bills.
According to Dirk Dewals, managing partner at Junction, the energy transition is “not solely about combating climate change”, but also “presents a pivotal opportunity for Europe to reduce its dependence on geopolitically sensitive carbon fuels and to build a couple of European technology leaders with global reach such as Ampacimon, which has 50% of its order book in the USA.”
Dewals said he expected electrification, particularly in the business-to-business sector, to play a “crucial role” in accelerating the move to net zero.
Stephan Heberer, CEO of Ampacimon, said the partnership with Junction had been “a game changer” for his company. “Junction’s deep industry expertise and extensive network have been instrumental in our latest growth acceleration and global scaling of our solutions,” he said, adding that the partnership had helped the company attract Neil Chatterjee, a former chairman of the US Federal Energy Regulatory Commission, as a board member.
