Swen holds EUR 150m first close for impact fund Swift 2

Swift 2 was launched in November 2021 and the next close will occur at the end of March, according to fund manager Olivier Aubert. He told Unquote that the hard-cap is set at EUR 400m and the final close will depend on the appetite of investors, but he expects the latest date would be in November 2022 with an aim of closing on EUR 300m. The fund is based in Paris and its lifespan will be 13 years. The fund will seek to invest in 20 assets and complete 10 transactions in 2022, with a ticket size in the range of EUR 5m-50m, said Aubert.

Speaking to Unquote, Aubert said: "The focus is to invest in greenfield assets; this takes time to be authorised. The holding period is 10 years at most and when we invest in these platforms we can set aside 10-20% for follow on rounds."

Aubert told Unquote that the fund was committed to making "green investments in assets that avoid 90% of green gasses. We replace natural gas with biogas so we avoid 90% of CO2 emitted."

Much like its predecessor fund, Swift 1, more than half of the fund's investments will be made in the biomethane sector and the other half in green hydrogen. Aubert said they will invest in infrastructure and corporates, but not in technology, adding that they offer a double-digit return without the risk associated with traditional PE firms.

As this is an impact fund, Aubert said: "We are committed to providing 100% of the carried interest, which is conditional to a financial hurdle as standard, but additionally, 50% will be paid only if we achieve an LP-approved set of extra financial targets such as greenhouse gas avoidance and job creation, among other targets. Out of this 100% commitment, 20% will be given back for philanthropic reasons to an NGO."

Swift 2 carries a Greenfin label and this provides investors with a guarantee that investments will contribute to energy transition, according to a press release. The fund will also remain consistent to the GP's impact doctrine, which includes environmental and social indicators; half of the carried interest the team stands to receive will be conditional on achieving targets on the aforementioned indicators.

The fund is managed by Aubert, who joined Swen in 2019. He brought with him 25 years of experience in the natural gas industry. His team is comprised of eight people who are dedicated to investments, assisted by four people focused on ESG and impact. Aubert said they have recruited someone who is joining the team in April and a further two people have also been appointed.

Swift 1 was the GP's first vintage fund; it was raised three years ago, and was fully invested as of November 2021. It held a final close on EUR 175m against a target of EUR 120m, according to Aubert. Half of the investments from this fund were made in France, and the rest was invested in neighbouring countries. The GP has EUR 6.5bn under management and has created three impact funds in total, including venture capital fund Blue Ocean, which held a first close in September 2021 on EUR 52m and is still fundraising.

Investors
Aubert told Unquote that investors in Swift 2 are French and European, and include pension funds, family offices and insurance companies. He added that there is one cornerstone investor, a undisclosed insurance company, which invested EUR 50m. The smallest contribution is EUR 3m.

Investments
The fund has made one investment in January 2022, becoming a minority shareholder in CVE Biogaz, a subsidiary of French independent renewable energy producer CVE. Swift 2 committed EUR 30m. Of the deal, Aubert said: "The seller wanted to have a minority investor and had a preference to work with a financing partner who has strong know-how of the business. In the end, we have a strong minority share. The traditional PE funds that are diversified are losing in competitive processes to people like us in niche sectors as we know what we are doing."

Aubert added that the GP mostly sits on the minority side of investments, but is flexible as it can also control a company. The firm plans to make 10 investments in 2022. Aubert said the GP prefers to invest independently, and would rather partner with local companies specialised in biogas or hydrogen. He noted that most of the projects are ready to build. The GP takes construction and operational risk; however, it does not take development risk, apart from when it invests in corporates, said Aubert.

Aubert said the GP will announce a second deal from Swift 2 soon and it has invested around EUR 20m. In total the fund has committed EUR 50m after only one month on the road, although Aubert did not disclose into which company; he did remark that it is not in France.

Aubert said the GP has a big deal pipeline. He anticipates concluding 10 transactions in 2022 and 20 investments overall. France will continue to be on its radar, but only one third of the fund will be invested in France, with the rest invested in Europe with flexibility to invest in Canada and the US.

People
Swen Capital – Olivier Aubert (partner).

Advisers
Equity – Allen & Overy (legal).

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