The Pipeline: Glennmont in first close for latest debt fund, Cbus quits climate alliance, Quantum’s $400m CCS bet

Glennmont closes second debt fund this year; Cbus quits net-zero alliance; and Quantum gives US CCS a $400 million boost. Welcome to The Pipeline, the start-the-week briefing for our valued subscribers only.

First look

Glennmont’s fundraising encore
Just last week, we reported that clean energy specialist Glennmont Partners had raised €700 million for its debut open-end fund NECRI. Barely a week goes by and the London-based firm has announced another fundraising round – this one a first close for its second energy transition credit strategy.

On Thursday, Glennmont said it had raised €250 million for the Energy Transition Enhanced Credit II fund that will invest in onshore and offshore wind as well as solar energy. According to a spokesman, the ETEC II has a final target of €500 million.

ETEC II will draw on the experience of Glennmont REBS Europe Fund I, its debut credit fund launched in 2020, which closed for further investment earlier this year. It has exposure to more than 150 renewable energy projects. According to the firm, primary lending and secondary loan portfolio opportunities are ever-increasing, “whilst banks face more restrictive capital requirement constraints and balance sheet recycling needs”.

It also maintains a “strong outlook” for energy-related assets due to inflation, which is primarily driven by rising energy prices, a development Scott Lawrence, a Glennmont partner, described as “pivotal in indicating a more positive future for borrowers in the energy sector”.

No winter of discontent for Glennmont, then.

Cbus quits net-zero alliance
ESG continues to be one of the defining investment trends in private markets, but one bugbear among investors has been the burden of reporting performance in relation to a range of different benchmarks.

Australian superannuation fund Cbus, which has approximately A$59 billion ($38 billion; €39 billion) in assets under management and is one of the world’s largest infrastructure investors, confirmed its departure from the Net Zero Asset Owners Alliance, a coalition convened by the UN that was itself part of the Mark Carney-led Glasgow Financial Alliance for Net Zero.

Cbus was the first Australian institution to join the NZAOA in 2020, at the same time as it set a target to reduce absolute portfolio emissions by 45 percent by 2030.

A Cbus spokesperson told affiliate title Responsible Investor that it was standing by that target, adding: “We made the difficult decision to focus our resources on internal climate change activities. We support the important work that the alliance is doing and wish all members the best in their endeavours.”

Cbus was joined in its departure by Austria’s Bundespensionskasse, which also cited resourcing issues in complying with the alliance.

Pipe down, new report tells hydrogen
With new reports seemingly weekly on the role that hydrogen could play in the energy system and decarbonisation, it can be difficult to figure out where the truth lies. So, Jan Rosenow, principal and director of European programmes at the Vermont-headquartered Regulatory Assistance Project, set out to seek the truth.

Rosenow analysed 32 independent, non-industry funded reports into the role of hydrogen for the purpose of heating, and found a lot of hot air. “Compared to other alternatives such as heat pumps, solar thermal, and district heating, hydrogen use for domestic heating is less economic, less efficient, more resource intensive, and associated with larger environmental impacts,” Rosenow noted.

Rosenow pointed out the study was only in regard to green hydrogen used for heating, acknowledging potentially more beneficial uses in power and storage. So, not completely a pipe dream, it seems.

Private infra a clear winner over listed, CEPRES states
Private infrastructure investment delivers significantly better advantages than its listed counterpart, according to recent analysis from CEPRES, a private markets-focused data analytics platform.

Comparing returns from 550 private infrastructure funds with those of the S&P Global Infrastructure ETF (GII) and Alerian MLP ETF (AMLP), CEPRES found that private markets only yielded negative returns once in this period – in 2009 – while AMLP’s returns were negative one out of three of these years and GII had four negative return years. Private infrastructure funds returned, on average, 7.54 percent net between 2007 through 2022.

And no, there wasn’t much difference between public infrastructure assets – public EPFs were indeed correlated – and CEPRES found that an investment in one of either GII or AMLP was an investment in both. Both indexes, CEPRES added, displayed significant volatility.

Maybe, the answer is – as Blackstone recently found out – to gain an opportunistic exposure to both.

Essentials

We have a favour to ask…
Once again a team from PEI Media is heading out on a (hopefully) balmy October morning for this year’s Royal Parks Half Marathon to raise money for Shelter, the UK homelessness charity. Any support will be very gratefully received; if you would like to donate, you can find our fundraising page here.

Grapevine

“People get emotional about water. They don’t get emotional about electricity, but water is different, [seen as a] God-given right. And because of climate change, because of population trends, there are issues”

Serkan Bahçeci, partner & head of research at Arjun Infrastructure, tells our Investor Forum in London of the difficulties of investing in the water sector

Who’s hiring

DWS attracts talent from Talanx
Deutsche Bank affiliate DWS has added two new members to its Frankfurt-based team as it seeks to expand its infrastructure investment activities in Europe. Peter Brodehser, who since 2014 served as head of infrastructure investments at Ampega, the asset management arm of German insurer Talanx, has joined as partner, responsible for building up and leading an infrastructure investment team.

“The German team will focus on investments in the field of renewable energies and other investments in infrastructure utility services,” DWS said in a statement.

Brodehser is joined by another Ampega colleague – Katharina Thomas – who will be part of his management team. Thomas was most recently head of portfolio management in the firm’s infrastructure division.

“The importance of investing in high-performing infrastructure across Europe is becoming abundantly clear due to geopolitical developments,” DWS chief investment officer Stefan Kreuzkamp said. “And we expect investor interest in infrastructure to continue to grow.”

Deals

Quantum Energy plots removal of Traces of CO2
It is, as Quantum Energy Partners noted, a “critical strategy in the global initiative to combat climate change”, as it invested $400 million to form Trace Midstream Partners II, alongside Trace Midstream, to help the firm develop carbon capture and sequestration and midstream assets across North America.

Trace’s CCS initiatives will be supported by incoming chief operating officer David Dell’Osso, former EVP and COO of Parsley Energy, a public oil exploration and production company. “With the addition of David and a dedicated subsurface team, we have assembled the in-house expertise required to develop, construct and operate projects across the CCS value chain,” stated Josh Weber, CEO of Trace II, in a statement.

Quantum’s investment places it as one of the few energy infrastructure funds investing in the CCS space. It will hope to lay out a path for others to Trace.


Today’s letter was prepared by Zak Bentley. Kalliope GourntisDaniel Kemp and Isabel O’Brien also contributed