Multi-strategy hedge fund ArkX will enter global renewable energy markets and look to invest in companies producing clean development mechanisms (CDMs) in early December, drawing on founders’ money and an institutional mandate as seed capital.
ArkX founders Geoff Evison and Lisa Wade will begin marketing ArkX as a carbon fund in November, aiming to raise $250 million from wholesale investors ahead of making its first investments on December 3. Evison said the majority of investments would be made in global renewable energy markets, due to a perception that domestic investors are more familiar with these securities. Allocations would also be placed in CDM projects, which enable Annex I Parties to the Kyoto Protocol, who have committed to slash average emissions, to finance emission-reduction projects in non-Annex I countries. Within the CDM framework, Annex I parties earn certified emission reductions (CERs), helping them meet their emissions targets. Evison, who said a more accurate definition of the vehicle would be an ‘anti-carbon’ fund, said ArkX’s point of differentiation from previous and current sustainable investment vehicles was its core focus on climate change. “There’s been sustainable investment, sure, but people will be more interested in climate change,” he said. There are up to 70 carbon funds operating worldwide, Evison said. Among these are Blackrock’s US$5.5 billion new energy fund, which has returned 24.7 per cent for the year-to-date, and Climate Change Capital’s 200 million euro, clean tech private equity fund. The 400 million euro Peony Capital fund, founded early this year and backed by the Bill and Melinda Gates Foundation, invests in CDM projects being run in China, aiming to extract returns and manage resultant carbon credits. Evison said ArkX’s initial engagement with the CDM sector would be venture capital investments in projects alongside commitments from Peony. While there are approximately 20 CDM manufacturers in Australia, about 350 operate worldwide. The global market capitalisation for CDMs nears $5 billion, Evison said. “There’s no shortage of places to put our money.” Evison and Wade have set up ArkX after careers in finance spanning more than 20 years. Most recently, Evison ran money with Sydney-based equity long/short hedge fund St Helens Capital, and Wade worked in proprietary trading with Citi.
While the energy transition and critical minerals are receiving a lot of attention as important megatrends, an Investment Magazine roundtable, hosted in partnership with New Forests, has heard that natural capital is an equally crucial piece of the nature puzzle but is "underrepresented, underinvested and generally misunderstood".
Hosted by Simon HoyleDecember 6, 2024
