Climate concerns have remained high on investors’ agendas. But with regulatory, governance and currency concerns still running high, Georges Beukering, Co-founder and Head of Capital Raising, Climate Fund Managers, details the way managers can allay investor apprehension when looking to invest in the space.
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Climate concerns have remained high on investors’ agendas. But with regulatory, governance and currency concerns still running high, Georges Beukering, Co-founder and Head of Capital Raising, Climate Fund Managers, details the way managers can allay investor apprehension when looking to invest in the space.
Can you outline the industry trends which have been driving growth and development within your firm over the past year?
The past year has seen significant macroeconomic turbulence in the financial markets and has had a knock-on effect in the capital raising space. Despite this, 2022 saw us continue to raise climate finance, which proves investors are becoming increasingly aware of the challenge posed to the investment community by climate change.
Currently, there is a general lack of substantial climate impact investment opportunities, and this is where we bring a value-add to our LP base. Using our development fund, we are garnering 40 high-quality climate infrastructure projects across the emerging markets. We see our growth being driven by offering our investors an opportunity that allows them to commit to the climate impact space while offering competitive returns, scale, and transparency.
Are there upcoming regulatory updates which could affect your business and that of your clients?
The two main regulatory changes we see having a tangible effect on the investment community are the Sustainable Finance Disclosure Regulation (SFDR) and the EU taxonomy for Sustainable Activities. We are seeing the “the great reclassification” regulations become stricter and asset managers downgrade their funds from Article 9 to lower SDFR classifications. Recently, Amundi reclassified a staggering $45 billion or “almost all” of their Article 9 funds to Article 8. Over the past months, we have seen over $70 billion be reclassified away from Article 9 by other major asset managers including Amundi, BlackRock and HSBC.
These regulatory changes are bringing welcome transparency to an opaque market. Climate Fund Managers manages exclusively Article 9 funds and as such offers investors the chance to stand out from the rest. Our investment strategy is premised on climate impact and so our funds (and future funds) will inherently be Article 9 aligned.
What are the primary challenges your firm and your clients are facing and what is critical to these being overcome?
The primary challenge facing our clients is getting comfortable with climate-related investments in emerging markets. We see institutional capital markets are still reluctant to make tangible private investments in developing markets. There is a high perceived risk spanning a range of topics including regulation, governance, and currency concerns.
To overcome these challenges, we use a blended finance approach which utilises funding from the European Commission, Dutch Government, and other concessional capital providers to remove the development risk and further improve the risk return profile for institutional investors during the construction and operational phases of the assets. For example, through the use of our concessional capital, we developed the first wind farms (60MW) in Djibouti, and two wind farms in Vietnam. Further, we have built a proprietary pipeline of projects including the world’s largest debt-for-nature-swap in Latin-America (well over $500m) and $200m waste-to-value platform business in Sub-Saharan which is partnering with ABInBev & BMW to realise their green ambitions on the continent. We have achieved this through our on-the-ground investment teams in Africa, Asia and Latin America.
For us, it is critical to understand the emerging market environment and partner with institutions who have an in-country presence. The Emerging market has strong infrastructure investment fundamentals. Over the last 10 years, 66% of global economic growth has come from the emerging markets and they are currently home to 4.3 billion people with an average age of 30 years. GDP growth and population growth generate strong demand for infrastructure.
Georges Beukering, co-founder and head of capital raising, Climate Fund Managers – Georges Beukering is the co-founder of Climate Fund Managers (CFM), and the initiator of the Climate Fund Managers’ innovative blended finance concept. At CFM, he leads the Capital Raising and Business Development function where his team recently held a second close for Climate Investor Two (a blended finance fund focused on Water, Sanitation, and Oceans Infrastructure in Emerging Markets) at $855 million bringing Climate Fund Manager’s AUM to c$1.8 billon. Georges’ background includes leading deal teams on project finance and mezzanine transactions at the Dutch Development Bank, FMO. Before joining FMO in 2005, he worked at ABN Amro in the Financial Markets department, and also at the Dutch Ministry of Finance.
