Raising capital

Decarbonization fund raises $1.4bn

A recently launched decarbonization fund backed by BlackRock and Temasek has raised $1.4bn in a final close.

April 25, 2024

Decarbonization Partners, a partnership between BlackRock and Temasek focused on investing in next-generation private companies that support the acceleration of decarbonization and the transition to a net-zero economy, has reached final close of $1.40bn for its inaugural late-stage venture capital and growth private equity investment fund, The Decarbonization Partners Fund I, surpassing its fundraising target of $1bn.

In addition to commitments from BlackRock and Temasek, the Fund has attracted a diverse set of over 30 institutional investors representing 18 countries, including public and private pension funds; sovereign wealth funds; insurance companies; corporates and family offices across North America, Europe and Asia Pacific, according to a news release.

Investors in the Fund include, among others, Allstate, BBVA, KIRKBI, Mizuho Bank Ltd., MUFG Bank Ltd., and TotalEnergies; and capital commitments from a number of Singaporean institutional investors. The diversity and depth of the investor base reflects the global nature of the opportunity around climate investing, which directly aligns with Decarbonization Partners’ global focus.

“This successful fundraise demonstrates the unique strength of our team and platform, which we’ve been building for the last two years. Clients have shown conviction in our ability to execute our strategy of supporting the acceleration of decarbonization and the transition to a net-zero economy through our investments,” said Dr. Meghan Sharp, Global Head of Decarbonization Partners. “Decarbonization Partners was deliberately set up as a purpose-built entity that can uniquely convene and collaborate with key players in the climate ecosystem: innovative companies, large corporates, co-investors, clients and later-stage capital providers. I’m extremely proud to be leading this business alongside our global partners.”

Launched in 2022, Decarbonization Partners has established itself as one of the leading climate technology investing platforms globally and is focused on developing an ecosystem of sophisticated investors who seek to accelerate capital deployment into the emerging climate tech asset class. The global team of investors also brings strategic, financial, operational, and technical expertise along with deep pools of capital to support Decarbonization Partners’ portfolio companies.

“There is enormous demand for energy infrastructure as many countries seek to transition to lower-carbon sources of power while also achieving energy security. Decarbonization Partners brings together the best of Temasek and BlackRock to identify generational investment opportunities in climate technology that we believe will help to bring down the green premium, enable a more affordable energy transition, and generate long-term financial returns for our clients,” said Larry Fink, Chairman and CEO of BlackRock.

“Addressing the climate crisis requires innovation at scale, as well as significant and sustained financial resources to enable that. No single entity can do it on their own. We’re pleased and encouraged to see many other partners and investors coming on board for Decarbonization Partners’ inaugural fund. Their participation will support the acceleration of innovative solutions for real-world decarbonization at scale,” said Dilhan Pillay, Chief Executive Officer, Temasek. “Such collaborations and collective efforts are critical as we strive to accelerate progress towards our global net zero ambition.”

The Fund’s dual-purpose investment strategy seeks to generate attractive long-term financial returns while investing in companies that are driving intentional, material and measurable decarbonization outcomes. Decarbonization Partners, a SFDR Article 9 fund, invests in companies with de-risked technologies that are ready to scale and can benefit from BlackRock and Temasek’s complementary platforms and deep access.

The Fund has already invested capital into seven companies that span several innovative decarbonization technologies. This includes investments in sustainable materials, including for improved performance in li-ion batteries, clean hydrogen, science-based carbon management services, low-emissions battery recycling, EV fleet management, and thermal energy storage for industrial applications. The team has built a robust pipeline of proprietary deal flow, which it will continue to execute on the coming months.

The Decarbonization Partners team has grown to over 25 members, including experienced venture capital and growth equity investment and portfolio management professionals across offices in New York, San Francisco, Singapore, London, Paris and Houston. The team was intentionally constructed to provide portfolio companies with trusted value-add partners who bring significant technical and operational experience.

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Personnel moves

Capital Power appoints new CEO

The Canadian-based power producer has appointed Avik Dey as its next CEO.

Capital Power Corporation’s board of directors has unanimously selected Avik Dey to be its next President and CEO and become a member of the board of directors, effective May 8, 2023.

The appointment follows the planned retirement of Brian Vaasjo who will support Dey to ensure a seamless transition, according to a news release.

The selection follows a rigorous North American search process conducted by a special committee of the Board, with the support of a leading executive recruiting firm. The board met with a wide range of high-quality internal and external candidates.

“Avik is a highly capable leader with deep experience in the energy and power sectors and has built a number of successful companies and teams,” said Board Chair, Jill Gardiner. “I am confident that through his knowledge, passion, and creativity he will inspire the Capital Power team to accelerate the company’s current strategic drive towards net zero. The Board looks forward to working with Avik as we continue to engage with our stakeholders and grow shareholder value. Avik will champion the team, driving the vision with our people who will own the outcomes well into the future.”

Dey spent more than two decades in executive, operational, investing and strategic advisory roles. He has invested over $12bn in growing long term value for energy and energy transition companies. Most recently Mr. Dey held key executive leadership roles with The Carlyle Group, NOVA Chemicals, and Canada Pension Plan Investment Board. Prior to these roles, he was President & CEO of Remvest Energy Partners in Houston, Texas and a Founder serving as Chief Financial Officer of Remora Energy.

April 19, 2023

Innovation, Personnel moves, Project finance, Regulatory

BASF electrolyzer project gets 134m from European Commission

The European Commission has approved a EUR 134m German measure to support BASF SE in the production of renewable hydrogen.

The European Commission has approved a EUR 134m German measure to support BASF SE in the production of renewable hydrogen, according to a news release.

The aid will support the construction and installation of a large-scale electrolyser at BASF’s Ludwigshafen site, which will have an annual production capacity of 54 MW and produce approximately 5,000 tonnes of green hydrogen and 40,000 tonnes of oxygen per year. The electrolyser is envisaged to start operating in 2025.

The measure will support BASF’s production of renewable hydrogen mainly to replace fossil-based hydrogen in BASF’s chemical production processes. Additional renewable hydrogen produced will be delivered for emerging hydrogen mobility applications like hydrogen-powered trucks or buses.

October 3, 2022

Project finance

US fuel cell developer garners tax equity investments

Connecticut-based fuel cell developer FuelCell Energy has closed on tax equity financings supporting at least three fuel cell projects in the US.

The company closed on a tax equity financing transaction with East West Bank for the 7.4 MW fuel cell project located on the US Navy Submarine Base in Groton, CT, also known as the Submarine Force. East West Bank’s tax equity commitment, closed in August 2021, totals $15m.

FuelCell Energy installed 7.4 MW of SureSource™ power platforms at the U.S. Navy Submarine Base in Groton, CT to provide a long-term supply of power to an existing electrical substation, according to a news release. The fuel cell plant is part of a multifaceted plan by the Connecticut Municipal Electric Energy Cooperative to provide new power resources and support the desire of the Department of Defense to add resiliency and grid independence to key military installations. The highly efficient fuel cell power generation project minimizes carbon output while providing continuous power to the strategic military base. The U.S. Navy continues to purchase power from CMEEC and Groton Utilities, who in turn purchase the power from FuelCell Energy under a 20-year power purchase agreement.

This pay-as-you-go structure enables CMEEC and the Navy to avoid a direct investment in owning the power plant which will be operated and maintained by the company.

The company also closed on a tax equity sale-leaseback financing transaction for the 1.4 MW SureSource 1500™ biofuels fuel cell project with the City of San Bernardino Municipal Water Department in California with Crestmark Equipment Finance, a division of MetaBank^®. Crestmark’s commitment totals $10.2m through a ten-year sale-leaseback structure and further demonstrates the market’s interest in FuelCell Energy’s differentiated ability to use on-site biofuels, to eliminate flaring and deliver carbon neutral decarbonization energy platforms.

A third tax equity investment in 2021 came from Franklin Park for the 7.4 MW fuel cell project located in Yaphank, Long Island, in New York. Franklin Park’s tax equity commitment totals $12.7m following the declaration of mechanical completion of the project.

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December 16, 2021

Project news, Raising capital

Exclusive: Seattle biomass-to-chemical firm planning equity round

A firm with plans for a biorefinery in Washington state will raise its first large equity round early next year.

Planted Materials, a Seattle-based biomass-to-chemicals company, is in early design stages for its first biorefinery in eastern Washington state and planning to raise an equity round in early 2025, co-founders Noah Belkhous and Greg Jenson said in an interview.

The company will seek to raise between $10m and $20m ahead of FID on the biorefinery, Belkhous said. The four-year-old company has raised $500k from angel investors to date and is currently raising another $1m from high net worth individuals in the Seattle region.

Planted Materials does not have a relationship with a financial advisor but is open to one, Belkhous said.

The company’s recycling model takes municipal landfill waste and converts it to chemical materials for pharmaceutical, paper, plastic and other manufacturing industries.

The proprietary recycling process is something the company would like to license to municipalities in the US and abroad, in addition to building biorefineries in the Pacific Northwest, Belkhous said. The company’s lab is currently based in the Ballard neighborhood of Seattle.

Early design work on the first biorefinery is underway. The duo expects CapEx to cap at $50m, reaching FID in 2026 and beginning construction that year.

While the majority of the company’s feedstock will likely come from the major metropolitan regions in the western PNW, refining capacity is more attractive in the east for reasons of space and existing waste management infrastructure. Jenson noted the presence of the relevant research campus of Washington State University in Pullman, as well as the Pacific Northwest National Laboratory in Richland.

Recently, the team accompanied Washington Governor Jay Inslee and members of the Washington State Department of Commerce on a trip to Sydney and Melbourne in Australia. The company has applied to a pair of $350k grants from the state.

January 9, 2024

exclusive

M&A, Raising capital

Quantron kicks off Series B equity raise

The German and American mobility provider is seeking to raise EUR 200m in a Series B equity raise, as the company plans to become a one-stop-shop for hydrogen-powered commercial vehicles, according to a teaser.

Quantron, the Germany and US-based hydrogen trucking manufacturer, is seeking to raise EUR 200m in a Series B capital raise, and has further plans to raise money in a Series C in 2024 or 2025, followed by an anticipated IPO beyond 2025.

The company plans to use proceeds from the Series B accelerate the roll-out of existing production and make additional market entries included expanding its operations in the US, according to a sale teaser seen by The Hydrogen Source. Stifel is leading the capital raise, as previously reported.

By advancing a full-scale zero-emission ecosystem, Quantron is seeking to take part in the sourcing and distribution of green energy and hydrogen, as well as building fuel cell and battery electric vehicles and components and offering customer solutions like aftersales, the teaser notes.

Quantron, which has offices in Augsburg, Germany and Detroit, Michigan, has brought in about EUR 28m in revenues since inception and expects EUR 60m in revenue this year, fueled by a EUR 100m order book and pipeline. The company has put 150 vehicles on the road to date and has 130 employees.

Its Series A capital raise of EUR 45m, completed in September, 2022, implied a EUR 250m pre-money valuation. The ongoing EUR 200m capital raise will come in the form of the Series B financing as well as working capital facilities.

The company recently announced commitments with FirstElement Fuel and Goldstone Technologies Limited. Quantron debuted its Class 8 hydrogen fuel-cell truck in the US at the Advanced Clean Transportation Expo in Anaheim, California in April.

June 28, 2023

exclusive

M&A, Project finance, Project news

3Q deals in focus: Macquarie’s investment in Atlas Agro

In one of the largest and most compelling clean fuels deals of 3Q23, Macquarie made a $325m investment into Americas-focused Atlas Agro, a developer of industrial-scale green nitrogen fertilizer plants that utilize green hydrogen as a feedstock. William Demas, head of Macquarie Asset Management Green Investments in the Americas, provides a closer look.

Macquarie Asset Management’s investment into green nitrogen developer Atlas Agro gives the manager a stake in the company along with the ability to invest in the developer’s projects.

The $325m investment, made via the Macquarie GIG Energy Transition Solutions fund, will benefit Atlas Agro’s previously announced fertilizer plant project in Richland, WA, and will also support the company’s global pipeline of green fertilizer facilities, according to William Demas, head of Macquarie Asset Management Green Investments in the Americas.

In addition to the 700,000 tons-per-year Richland project, Atlas Agro is pursuing a project in Minas Gerais, Brazil that will produce 500,000 tons per year. Both projects would make nitrate fertilizer and are estimated to cost $1bn. An additional facility is planned for the US Midwest.

In the production process, the plants utilize air, water, and renewable electricity as the only raw materials.

“There are a number of things that attracted us to Atlas Agro,” Demas said in response to written questions. “They have a strong management team with an established track record managing established companies and delivering projects in the fertilizer space.”

The GIG Energy Transition Solutions fund has a target size of approximately $1.9bn, which to date is just over 50% committed, according to a source familiar with the fund.

Next phase

Equally important for the Atlas investment, Demas added, is that the company is aligned with Macquarie’s next phase energy transition thesis in the US – in this case hydrogen.

“In this application, green hydrogen will be used as a feedstock rather than as an energy carrier, and the end-product of green fertilizer will attract customers looking to enter into long-term offtake contracts,” he said.

Through the development of plants in Washington state and the US Midwest, Atlas Agro is seeking to take advantage of favorable logistics to displace the need for imported fossil-fuel based fertilizer. Brazil also imports around 95% of its nitrogen fertilizers, according to Atlas.

“An important benefit of Atlas Agro’s model is the availability of locally produced, high-quality fertilizer, eliminating many of the issues associated with international supply chains,” Demas said, noting that offtakers are local to Atlas Agro’s operations.

Further, Macquarie and Atlas plan to pursue a project finance model for funding the projects under development.

“As an infrastructure investor, we focus on opportunities that are bankable, which means, ultimately project financeable,” Demas said. “We backed Atlas Agro because we believe their approach to project development, commercialization, construction and operations aligns with our views on how to underwrite infrastructure investments.”

October 6, 2023