Climate Investment Newsletter 12/26 - 1/8

Individual Deals and Market Watch

Public Equity: The two US equity funds with the strongest returns in 2020 both from Invesco focus on clean energy and have more than tripled in value thanks to a surge in the value of solar energy stocks, which themselves have enjoyed tailwinds due to inflows from ESG strategies.

Orsted A/S, the world’s largest offshore wind developer agreed to sell a 50% stake in 605 MW Greater Changhua 1 Offshore Wind Farm in Taiwan in a deal worth about NT$75 billion ($2.7 billion). Caisse de depot et placement du Quebec (CDPQ) and Cathay PE, a Taiwanese PE fund, were acquirers.

Polish oil refiner PKN Orlen (WSE:PKN) has raised PLN 1 billion (USD 272.2m/EUR 222.8m) in an oversubscribed bond issuance to finance ongoing investment projects that align with its 2050 carbon neutrality strategy.
The company has issued 10,000 bonds with a margin of 90 basis points per annum in the first interest period, while in subsequent interest periods the margin will depend on the company’s environmental, social and governance (ESG) rating from MSCI ESG Research Ltd. PKN Orlen noted that the rate is the lowest in its operating history.

The Qatar Investment Authority is investing $125 million into energy storage systems integrator and power management tech developer, Fluence, in a deal that will value the company at over $1 billion.

After arranging $4.3 billion of sustainable bond sales for Nordic borrowers in 2020 -- more than any other bank -- Danske now expects the primary market to grow a further by 25% in 2021.

Postens Pensionsstiftelse, the investment manager of the Swedish national post invested in Foresight Group’s unlisted energy infrastructure fund. The investor took part in an €89m round alongside an unnamed US-based institutional investor according to Foresight Group. This close takes fund capital to about €430m alongside €170m in co-investment capital. Foresight Group is considering listing itself on the London Stock Exchange.

Asteria Investment Managers has launched climate-focused and impact Ucits funds, the firm has announced.
Asteria Funds – Planet Impact Global Equities fund will pick companies whose products, services or technologies help to decarbonise and depollute the planet, as well as promote renewable energy and energy efficiency solutions. The universe of the fund includes 3,000 listed stocks.

Another SPAC. Fortistar Sustainable Solutions, a blank check company formed by Fortistar filed on January 6th to raise up to $200 million in an IPO valued at up to $250M.
Fortistar Sustainable Solutions will seek to invest in companies reducing carbon intensity in the energy, industrial, and transportation value chain.

Carlyle Group Inc. has committed $374 million in equity capital to Amp Solar Group Inc., a Canada-based global renewables developer.
The investment is intended to spur growth in North America, Japan, Australia, Iberia and the U.K., according to a statement. Terms of the deal weren’t disclosed.

SK Group’s $1.5 billion investment in the U.S. fuel-cell maker Plug Power Inc. marks one of the biggest hydrogen deals to trade, reflecting a booming appetite for the alternative fuel in Asia and Europe.

Macro Commitments

Governments and companies are expected to issue $500bn in green debt in 2021, nearly half the total that has been raised since the asset class’s inception, according to a projection from Swedish bank SEB. In the first 11 months of 2020, global borrowers sold $270bn of the debt, despite COVID.

Israel's Environmental Protection Ministry has formed a new plan to fight global warming, with the aim of transitioning from fossil fuels to a low-carbon economy by the year 2050.

Danica Pension published its new sustainability strategy, with goals to cut its €44.7Bn real estate portfolio carbon emissions by 69% by 2030 and increase its focus on biodiversity through addition of wild spaces near construction projects. The reduction targets for Danica’s DKK35bn (€4.7bn) real estate portfolio include a 30% cut by 2023; 37% cut by 2025 and 69% by 2030 – all based off 2019 levels.

Climate Action 100+ (CA 100), which is backed by 545 investor signatories managing a total of around $52 trillion in assets, engages with the 100 biggest greenhouse gas emitters and a further 60 companies it views as key to tackling climate change.
CA 100’s 2020 progress report finds 43 percent of its focus companies have now set ‘a clear ambition’ to achieve net-zero by the middle of the century. As few as 10 percent have included Scope 3 emissions in their 2050 targets.

International Finance Corporation (IFC) has approved a $265 million financing package for Brazil’s Banco Alfa de Investimento to compose its loan portfolio to acquire flexible-fuel, electric, or hybrid vehicles. This investment will help strengthen the climate finance market, mitigate climate impact, and support Brazil’s economic recovery. The first tranche is a $100M on IFC’s account and $65 million from other financial institutions. The second tranche of $100 million is expected to be released in 2021.

Frameworks and Case Studies

Oil, gas and coal production must fall six percent a year in order to limit catastrophic global warming, the United Nations warned Wednesday, even as high-polluting nations bank on fossil fuels to drive their Covid-19 recoveries.

According to a major new report from the Food, Farming and Countryside Commission (FFCC), published 7 January, land use in the UK must be dramatically transformed by the end of the decade if the UK is to meet its 2050 net-zero target, with space re-allocated from livestock to vegetables, meadows and hedges.

The demand for plant-based meat is set to skyrocket an estimated 200% over the next five years in major Asia-Pacific markets, according to a new research report.
Highlighting consumer concerns about health and sustainability as key drivers of growth, the research also predicts a sustained increase in the market size for plant-based meat alternatives across the entire Asia-Pacific region.

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