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The Interview CASPER HEIJSTEEG
Wermuth Asset Management GmbH, the exclusive BaFin-regulated investment adviser to the Green Gateway Fund LP, recently announced a fourth consecutive investment of €6m, in Primekss, a technologically advanced concrete specialist.
W
ermuth Asset Management (WAM) is a German family office and BaFin-regulated investment adviser committedto
sustainable investments. The company’s headquarters are in Mainz, with a branch office in Moscow. The firm’s main clients are the funds it sponsors. Investors in these funds are wealthy people, family offices, funds of funds, pension funds and sovereign wealth funds. WAM is engaged in several alternative asset classes.
What more can you tell us about Wermuth Asset Management?
Since 1999 WAM has built a strong reputation. At their peak in 2008, the funds advised by the firm had invested about $1bn mainly in eastern European listed equity, debt, private equity, real estate, power infrastructure and forestry assets. WAM seeks to contribute through its activities to a profitable move from a linear (take, consume, throw away) to a circular (designed to be waste- free) economy, and resource efficient growth in general. It is a signatory of Transparency International’s Business Principles for Countering Bribery, and the UN’s Principles for Responsible Investments.
I joined WAM in May 2012 after having been with a Russian subsidiary of Gimv (Belgium) for more than ten years. This was an exciting period. We assisted in bringing many small and medium sized enterprises (SMEs) to maturity and delivered healthy returns to our investors. In 2007-08, after
being inspired by Al Gore’s book “An Inconvenient Truth”, I had co-founded a small fund investing in Dutch clean tech start-ups. I wanted to continue doing what I was doing, but with a clear aim to have an environmental impact together with financial return.
When and why did you decide to join Wermuth Asset mangement?
Although several of the companies we invested in are doing reasonably well, the financial and economic crisis depressed the climate for early stage companies. When Jochen Wermuth, the founder of WAM, told me in early 2012 that he was setting up a growth stage fund focused on European companies active in energy and resource efficiency, the match was quickly made - even more so because the strategy of the fund includes introducing portfolio companies to the markets of Eastern Europe where I had been active for a long time.
What are the special features of that fund?
The name of the vehicle is Green Gateway Fund (GGF), a Jersey-based LP. It had been co-founded by WAM and Sinek, the wealth fund of Tatarstan, a resource-rich autonomous region within the Russian Federation. GGF invests “growth capital” of €5–30 million per firm, with an emphasis on energy and resource efficiency. Almost all of the firms are based in the EU. The fund aims to help portfolio companies to access the eastern European market via the “gateway” of Kazan, the region’s capital. Kazan is an SME-friendly city,
GGF provides capital and know-how to portfolio companies that intend to sell resource efficient products there. Let me point out that Russia consumes about four times more energy per unit of GDP than Germany. This shows you how much needs to be done and where the opportunities are.
What sort of investments has the fund made so far?
In 2013, it made four. The first was in OTI Greentech (OTI), a specialist in oil cleaning and
referred to by some as the Singapore of Eastern Europe.
What can you tell us about the Fund?
Most of all, it’s about global resource shortages. As the world’s middle class grows from one to two billion people in the next decade while its population will probably reach nine billion by 2050, the demand for commodities and energy will increase more than proportionally. Resource efficiency is therefore an issue that will be with us for a long time.
Most economic growth will take place in
developing countries. The fund aims to invest in companies that are best positioned to benefit from this. Eastern Europe is the main emerging market next door and thus a natural place to be active for European companies. However, many SMEs find it difficult to export to these countries or set up operations there. As is well known, these are not necessarily easy markets.