Polestar Capital, a Dutch asset manager and impact investor, announced on Tuesday, April 4, that it has added €85M to its Polestar Capital Circular Debt Fund (PCDF), bringing the total to €187M to accelerate the transition to a circular economy.
Investors include Dutch state impact investor Invest-NL and insurers Onderlinge ‘s-Gravenhage and De Hoop. The Province of Limburg has also decided to participate but is still finalising the details of its involvement.
Maarten van Gaans-Gijbels, deputy for Energy and Climate of the Province of Limburg, says, “The investment of Limburg in PCDF contributes to the Dutch government’s ambition to be fully circular by 2050, by making sure that financing is available for innovative circular economies from Limburg and beyond to scale-up and generate the necessary impact.”
Financing for projects with meaningful impact
Founded in 2012, Polestar Capital claims to fund sustainable projects with a solution-oriented approach and making a significant difference. It is regulated by the Dutch Authority for the Financial Markets (AFM) and the Dutch Central Bank (DNB).
With the PCDF, Polestar Capital backs ‘innovative’ circular projects that have the potential to have a global systemic ecological effect, both by waste reduction and recycling and by the replacement of fossil fuels. This lowers the use of virgin resources and carbon emissions.
These initiatives frequently struggle to secure adequate financing. Such ventures are typically too innovative for banks to fund in full with equity and they are typically too capital-demanding for venture investors.
PCDF enables circular production businesses to validate their technologies and business models on a commercial scale by filling the financing gap.
Polestar Capital keeps a log of each financial risk it has found, including a summary of the risk, the management steps taken, and the tracking of those steps. The fund, thus, opens the way for other financiers to support the scaling up of these technologies in the future.
Accelerate the transition to a circular economy
Jan-Willem König, director of Polestar Capital, says, “The circular companies that the PCDF finances are capital intensive and take time to realise positive cashflows. This means they require relatively large sums of patient capital.”
“Unfortunately, we don’t have the luxury to be patient in scaling sustainable circular technologies, as we need to reduce our emissions and pollution rather sooner than later. The participation of the new investors in the fund will be of great support in that regard, by further enabling the fund to accelerate the transition to a circular economy.”
The anchor investor in the fund, Pensioenfonds Detailhandel, which has a €100M participation and is the Dutch pension fund for the retail industry, says it is eager to collaborate with the new investors.
Henk Groot, CIO of the pension fund, says, “A year ago, we put the Netherlands on the map internationally as the first country to open a fund specifically geared towards solving the funding gap for circular economy projects.”
“The onboarding of new investors in this funding round shows how groundbreaking this fund is. Everyone realises how important it is to make the transition to a circular economy, these new investors help to make sure that this is not just a goal, but a work-in-progress.”
Closing the financing gap is crucial
The new investors go into detail about their motivations for joining Europe’s largest circular debt fund.
Tim van Vledder, senior Investment Manager at Invest-NL, says, “Circular scale-ups really need enough financing to accelerate their growth and, by extension, the transition to a circular economy. It is one of the crucial ingredients that the PCDF supplies, by mixing financing with knowledge of the market.”
“A lot of investors don’t have the knowledge or mandate to operate in this crucial market segment. We expect a fruitful collaboration with all the stakeholders in PCDF.”
Seada van den Herik, managing director of insurer Onderlinge ‘s-Gravenhage, adds, “As a mutual insurer we, together with our members, distinguish ourselves by directing attention to societal welfare. PCDF offers us the opportunity to invest in necessary societal changes to make sure welfare continues improving. This is a perfect fit with our mission: Growing older happily, together.”
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