APG has made the first investments for pension fund ABP in the energy transition fund ANET. ABP announced today to invest 45 million euro in the development of ‘smart heating grids’. This investment shortly follows an investment of 7.5 million euro made in the beginning of October in fifty innovative Dutch startups. ANET was established in 2019 with the objective of stimulating sustainability in the Netherlands.
A smart heating grid combines several sustainable heat sources for the heating of houses, factories and offices and this way contributes to lower CO2 emissions. ABP is investing through the specialized investor Asper Investment Management in the fund ‘Dorothea’. That fund is focusing on the exploitation and development of smart heating grids, meaning entire residential areas will be able to eliminate the use of natural gas.
Rockstart
ABP reserves 250 million euro to begin with for small-scale initiatives in the field of sustainable energy. For the investment made in the 50 Dutch startups, APG also collaborates with a specialized party. The specialized party in this case is Rockstart, a fund manager that intensively guides and supports promising young businesses with financing, knowledge and access to relevant networks. Jeroen Schreur, together with his team, is responsible for ANET on behalf of APG Asset Management: “Rockstart offers us capacity and access to innovative startups that contribute to the Dutch energy transition we don’t seem to have time for ourselves.”
Selection procedure
The portfolio of the so-called Rockstart Energy Fund is built gradually by adding ten startups to the portfolio every year by means of a careful selection procedure. Rutger van Wersch, portfolio manager ANET: “The first selection by Rockstart takes place this month. It is therefore not yet possible at this time to say exactly which startups will end up in the portfolio. What we do know is that these startups contribute to the digitization of the energy transition by means of data applications and digital technologies. From energy-efficient houses (smart homes) and with smart meters driven by artificial intelligence to software for grid operators helping them to control the energy network of the future.”
Risks
Startups are relatively risky investments, Schreur acknowledges. However, the expected returns sufficiently outweigh the risks. “We expect a number of startups to grow into a ‘normal’ company with a reasonably stable annual turnover and profit. But it’s true that a part of the startups will not survive. Our modelling of the expected returns is based on conservative historical data in terms of their success rate. We concluded that we are sufficiently compensated for the risks we take.”
Venture capital
The Rockstart Energy Fund is also one of the six funds able to make a claim to the Seed Capital scheme of the ministry of Economic Affairs and Climate (Dutch ministry of EZK). Private investors and the government together fill funds for startups in this scheme, to which the government contributes a maximum of 50 percent. Of the 67.5 million euro new venture capital, 32 million originates from the Dutch ministry of EZK. Five million of that amount has been awarded to the Rockstart Energy Fund.