Energy Transition Fund boosts smart innovations

ABN AMRO established the Energy Transition Fund in 2018. With over EUR 200 million at its disposal, the fund focuses on four pillars: renewable energy, energy efficiency, clean mobility and smart grids.

The companies in which the fund invests, benefit not only from a capital injection, but also from ABN AMRO’s knowledge and network. ETF also introduces members for supervisory boards, provides support in strategic decision-making, and assists in arranging funding. Since its inception, the fund has made twelve investments ranging from EUR 10 million to EUR 25 million per company.

Lightweight wind turbine blades

ABN AMRO’s strategy is to work together with its clients to achieve sustainability. “By investing in companies that are accelerating the energy transition, ABN AMRO can provide this market with an extra boost. That is why we are investing in companies where we can support sustainable growth”, says Pieter Smit, Investment Director at the Energy Transition Fund. “At the same time, we have a target for financial returns. We are not the type of impact investor where returns take a back seat – for us, impact and return are on an equal footing.”

The fund invests solely in companies that devote at least half of their activities to the energy transition. These range from companies generating renewable energy to projects involving heat storage or improving the infrastructure of charging stations. The fund’s latest addition is Fiberline Composites, a Danish manufacturer of carbon fiber and glass fiber components, which make wind turbine blades lighter and stronger.

“Wind turbines are getting taller, and their blades longer, with the result that they need to be reinforced to keep them from flexing too far out. Carbon fiber and glass fiber components produced by Fiberline Composites are used in the blades, making them both lighter and stronger,” explains Investment Associate Gijs Romer. “As the blades become lighter, the force exerted on the tower and turbine decreases. Consequently, less material is needed for other parts of the turbine, so the same amount of wind energy is produced at a lower cost.”

A step forward

The investment in this innovative company perfectly fits ABN AMRO’s strategy and that of the Energy Transition Fund. Fiberline Composites has seen sales triple in the last three years and aims to repeat that performance over the next five years with ABN AMRO as its partner.

Pieter says, “This transaction is very special for us because we were looking to establish a position in the wind sector supply chain. We were able to make a valuable contribution to the company’s supervisory board, bringing considerable sector expertise. We therefore think that our participation can represent a big step forward for the company. After all, it is not just about the capital. The value we add is very much linked with our sector knowledge and with access to our network. The companies involved have really benefited from all these things.”

The fund specifically looks beyond a product’s sustainable end goal, Gijs explains: “If a company is contributing to the energy transition, people tend to rubber-stamp it as ‘sustainable’. But how sustainable is its value chain? The materials it uses and reuses? Those are the things we look at, too. Fiberline Composites, for instance, is involved in multiple sustainability projects involving impact measurement and reduction of material use. The company uses green electricity in its production activities and is working hard to minimise waste streams.”

Added value

The fund generally invests in companies for a period of five to seven years, although Pieter says there is no hard exit timeline. “Some sectors are growing by 10 to 30 percent a year,” says Gijs. “Growth in itself is not the challenge necessarily. Indeed, with growth of that magnitude, applying focus may become the challenge. We aim to do so by setting priorities. In addition, we aim to add value to medium-sized, fast-growing companies by improving professionalisation. At Fiberline Composites, for example, our support involves expanding their factories at an international level so they can maintain a presence closer to their customers’ factories. It is in ways like this that we aim to enable sustainable businesses to create value and make an impact.”