- Advertisement -
- Advertisement -

Sustainability a No-Brainer for Infrastructure

- Advertisement -

Stockholm (NordSIP) – By definition, infrastructure is a long-term investment and investing with this type of horizon requires more than the usual financial analysis. Consequences must be carefully analysed, and risks that are not immediately apparent must be taken into account. As he is approaching the final close on his first fund, Sweden-based infrastructure investment manager and founding partner Philip Ajina explains why and how his firm, Infranode, chose to focus on sustainability.

“This was an exciting project,” starts Ajina, talking about his firm’s ESG policy. “We took it bottom up and had a lot of brainstorming and workshops with the team. We wanted to come up with something that would be completely integrated in our DNA.” As an example, Ajina shows how ESG is at the heart of the firm’s investment process. “We have a traditional investment process, with an investment committee that we bring each investment case and business plan to.” But in addition, investment managers are also required to perform an ESG due diligence with what is internally called the ESG tool, a spreadsheet that identifies an array of potential challenges that each receive a score. Once an investment is approved, this list becomes a to do list. “If we are a majority owner,” Ajina adds, “we can impose improvements. If we are a minority owner, which we quite frequently are, we make our voice heard by making recommendations at the board level.”

So far, all three transactions the fund has completed with its early commitments already reflect the firm’s ESG focus. For two of its first investments, the firm chose district heating projects, in a sector where large inflows of capital are needed to modernize the existing network of municipal heating and transition from fossil- to biomass-based plants. In the first investment, Infranode invested together with a London-based renewable energy fund in a Swedish district heating company that has bought the district heating systems in some Swedish municipalities. The second district heating investment is in Norway, where Infranode co-owns a district heating company with a municipality in the Oslo region. The third investment is deployed over time with Eneo Solutions, a company who offers a full-service package for geothermal heat pumps and rooftop solar panels. “Infranode is the capital partner that finances each individual project and Eneo, as the industrial partner, handles all other business-related matters,” Ajina explains. “The planning, the construction and the management are taken care of and the end-client doesn’t have to invest.”

For Ajina, being conscious and pro-active about sustainability is naturally also part of de-risking investments. “As a 25-year buy-and-hold investor, we need to make our investments resilient for the future and we believe that an asset with ESG short-comings is likely to deteriorate in value over time,” he comments. “It is fundamental for us to consider the true long-term perspective in everything we do.”

 

Read the rest of the article and more on real estate and infrastructure here.

close

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Aline Reichenberg Gustafsson, CFA
Aline Reichenberg Gustafsson, CFA
Aline Reichenberg Gustafsson, CFA is Editor-in-Chief of HedgeNordic.com and NordSIP.com. She has 18 years of experience in the asset management industry in Stockholm, London and Geneva, including as a long/short equity hedge fund portfolio manager, and buy-side analyst, but also as CFO and COO in several asset management firms. Aline holds an MBA from Harvard Business School and a License in Economic Sciences from the University of Geneva.

Latest

Most Popular This Week

Voices

Request for Proposal

- Advertisement -

Latest Articles

Lynx is Fund Company of the Year, Says Privata Affärer

Stockholm (HedgeNordic) – Lynx Asset Management has been named “Fund Company of the Year” by Swedish business magazine Privata Affärer. The distinction comes after...

RFP: Absolute Return Multi-Strategy/Fund of Funds

(Global Fund Search) - A Danish Institutional Investor is searching for an absolute return strategy for an allocation of EUR 40 million. The mandate...

Brummer Multi-Strategy Navigates 2022’s “Perfect” Storm

Stockholm (HedgeNordic) – 2022 experienced a “perfect” inflation storm due to an unprecedented amount of monetary and fiscal policy stimulus during the pandemic, war,...

Dream Comes True for Grönblom

Stockholm (HedgeNordic) – Ernst Grönblom had been running his high-conviction strategy of cherry-picking the stock market’s undervalued future winners under the umbrella of United...

Boarding the Broader Alternatives Ship

Stockholm (HedgeNordic) – Tore Davidsen, portfolio manager of SEB Eureka Fixed Income Relative Value since its launch in 2018, will join BankInvest as Senior...

Year of Stabilization of Interest Rates

By Kari Vatanen, CIO of Veritas: The year 2022 was a year of negative surprises in the investment markets and in the global economy. Hopes...