- Advertisement -

Related

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.

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 Articles

AIX Dynamic: Long-Term Megatrends, Dynamic Exposure

Sweden’s AP7 Equity Fund, the default option for pension savers who do not make an active fund choice, has proven to be a rewarding...

Nordic CTAs Ride Bond Selloff to Another Strong Month

After a strong August, the NHX CTA Index enjoyed another successful month in September, driven primarily by gains in fixed income amid an intensifying global...

Historic Small-Cap Discount Offers Long-Term Opportunity, Not a Timing Signal

Small caps are trading at a historically wide valuation discount to large caps, creating a potentially attractive long-term opportunity even as the valuation gap...

Europe’s Sovereignty Push Could Benefit Small & Mid-Caps

European small and mid-cap equities are entering a potentially more constructive phase as Europe’s push for economic and strategic sovereignty coincides with improving domestic...

Taiga’s Long/Short Playbook for Nordic Small Caps

A first-time investor looking at the roughly 6 percent cumulative return from Nordic equities over the past two years could be forgiven for looking...

AI Has Changed the Small-Cap Equation

The AI-driven rally in mega-cap stocks has widened the performance gap between large and small caps, leaving smaller companies trailing across global equity markets....

Allocator Interviews

- Advertisement -

Voices

Request for Proposal

- Advertisement -