Polestar launches circular debt fund with EUR 400m hard-cap

The fund has raised EUR 100m from its anchor investor and is targeting an additional EUR 300m to reach its hard-cap.

Polestar has previously funded 14 projects in line with the strategy of PCDF, partner Jan-Willem König told Unquote, but this is the firm's first fund dedicated to this strategy across the Netherlands.

"There is a pipeline of more than EUR 2.4bn for these projects in the Netherlands and, given the financing gap, I see far more potential than just this fund," König told Unquote. "We are in structuring and due diligence discussions for the first projects."

The fund will measure impact by measuring more than 30 impact-related key performance indicators, and has specific fund objectives on three factors, König said: the reduction of waste with a low-end application (such as incineration); the amount of fossil fuels and raw materials that are prevented from being used; and CO2 reduction, measured via a lifecycle analysis.

The fund targets gross IRR of 10% and net IRR of 6%, König told Unquote.

Investors
The fund's first LP is the Dutch Pension Fund for the Retail Sector (Pennsioenfonds Detailhandel). Dutch banks, asset managers, insurance companies and other pension funds are expected to invest in the fund as the fundraise continues, König said.

Investments
The fund is dedicated to providing financing for Netherlands-based projects and companies with the potential to create systemic ecological impact in the areas of carbon emission and waste reduction, and the replacement of fossil fuels, Polestar said in a statement.

The fund will provide financing of EUR 5m-20m per project or company, providing senior, mezzanine, subordinated and unitranche loans. The vehicle has a seven-year investment period with a tail of five years, König told Unquote. It has not made any investments to date.

"We look at the technological readiness level of an investment and we often finance the first commercial stage of a project or company," König told Unquote. "Banks don't act here, as you need to de-risk and need a specialist team, but our team can assess, de-risk and do due diligence on the projects."

Polestar works with law firms including Stek and Bird & Bird for these projects, König said. The GP works with consulting firms Ingenia and Royal Haskoning for its impact analysis.

People
Polestar Capital – Jan-Willem König (partner).

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