The launch of Green Rock Energy Partners, a private equity firm with a focus on “sustainable infrastructure investing”, according to its website, has officially launched. Based in New York and incorporated last year, it comprises five managing partners – all former fossil fuel executives – and more hiring announcements are expected to come in the following months.
The five executives are Andrew Kelleher, former head of Glencore’s US Oil Group; William Forster, a former executive at Lehman Brothers; Martin Mitchell, former COO of Morgan Stanley‘s commodities division; and Steven Schmitz and Cody Myers, two natural gas executives.
“Our backgrounds include anywhere from high finance to commodity trading to commodity operations and logistics to more a sales and trading type of background,” Myers told Infrastructure Investor. “So, I’d say we bring a very diverse skill set compared to what you see with a lot of other fund launches. And that is what we see as our competitive advantage.”
Outside-the-box or another wheelhouse entirely?
Also a distinguishing factor for the firm in an investment landscape that has seen a deluge of capital in recent years is strategy, according to Myers. “We’re really lower middle-market. But I call it ‘early-stage private equity’. We’re backing entrepreneurs with growth equity… It could be a larger project up towards $50 million to $100 million, but with the equity cheque required being between $5 million to $20 million and the balance being in debt.”
The firm, says Myers, is “targeting at or above private equity-like returns”, adding that “our focus is circular economy, what we call sustainable infrastructure, particularly renewable energy. We are not wind and solar people… We mainly focus on transportation fuels. So, what you’ll see is renewable natural gas or sustainable aviation fuel or renewable diesel –eventually getting into hydrogen.”
Green Rock’s first portfolio investment came in the form of an Indiana-based “renewable natural gas” company in Q3 2021 and will be announced within the next few weeks. The investment came from the firm’s first fund — which, according to Myers, has already closed.
The terms “renewable natural gas” and “renewable diesel” may seem like oxymorons, but according to Myers, they apply to gas extracted from biomass-based forms – meaning landfill gas, agricultural waste or food waste. Nevertheless, whether or not biomass natural gas meets the scientific definition of “renewable” – meaning the source of energy is not depleted by use – is questionable at best.
For these industry veterans, then, old habits will die hard.
“We want to stick with existing solutions that will be able to kind of contribute to the energy transition… rather than reaching for a technology or reaching for a business platform that might have very good merits for the future but will not make an impact today,” Myers explained.
When asked about the issue of greenwashing, Myers responded: “Everyone has their intentions to do well. One of the challenges is that we’re rebuilding an entire new sector overnight that has been in place for so long. Oftentimes the easiest way is to take an easy path. And I know it sounds obvious, but one of those ways is that it’s very easy to make an announcement. It’s very tough to actually get things done. And oftentimes announcements overshadow success.”
Whether or not the announcement of the firm’s establishment will overshadow its success remains to be seen, as Green Rock has the rest of the capital in its first fund left to deploy. How will success for the firm be measured?
“In addition to putting an ESG policy in, we really base our investments on the dollars per metric time that it takes to reduce emissions,” Myers said. “And we’re very much focused on the absolute magnitude and the longevity of this.”
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