Private markets investors combine forces to form Urban Partners

The investment thesis behind Urban Partners stems from the fact that, although just over 50% of greenhouse gas emissions come from buildings and industry, only 13% of global investment goes towards this topic, the firm said in a press release.

2150 partner and co-founder and Urban Partners leadership committee member Christian Hernandez described Urban Partners as “a family of investment businesses” in which each entity will play a role in investing in the decarbonisation of the built environment across the “climate capital stack”.

“Over last couple of years, we have seen that silos don’t work,” he said. “There are gaps in the toolkit for addressing problems and funding solutions in urban environment.”

Although the new group will act first and foremost as an investor, it will also have a role to play in education and agitation around the topic of the decarbonisation of urban space, said Hernandez. Forming a combined entity will give the firm scale for its message, he said, citing a 2019 speech by António Guterres in which the UN Secretary-General said that cities are the space in which the climate battle will be largely won or lost. 

“This announcement is also an invitation for others to follow us,” said Hernandez. “We think this has fantastic potential for superior returns while delivering on the type of planet that we want to inhabit.”

Strategy synergies
The initiative came about in part due to the relationships between the firms involved, Hernandez said. 2150 co-founder Mikkel Bulow-Lehnsby also co-founded NREP, and the real estate investor has used technology developed by the venture capital firm in its real estate projects, Hernandez said.

Urban Partners has EUR 20bn assets under management (AUM) across its separate units, according to a press release. The combined firm currently has around EUR 5bn in dry powder to deploy, Hernandez said.

The partners of each individual firm are all equity holders in the new Urban Partners structure, although the funds housed within it will continue to be managed separately and will operate with independent investment committees, said Hernandez.

2150’s venture capital strategy focuses on startups that are developing technologies to make the build environment more sustainable. Its debut fund is an Article 9 vehicle under the EU Sustainable Finance Disclosure Regulation (SFDR), said Hernandez. It held a final close in 2021 on around EUR 270m, surpassing its EUR 200m target and backed by limited partners (LPs) including Norwegian sovereign wealth fund Nysnø and Credit Suisse, according to Unquote Data.

2150 has been deploying the fund since its first close in 2020 and has now backed 16 companies, Hernandez said. These include US-based Biomason, through which 2150 has backed the development of a process that uses microorganisms to build concrete and cement, with the aim of reducing the emissions associated with the production process.

Meanwhile, newly established Luma Equity is led by Stefan Wallander, who joined NREP in 2016 and is currently partner, head of Sweden and group chief business officer (CBO) at the real estate investor. Luma Equity will focus on companies based in Northern Europe that provide proven solutions to urban sustainability challenges, the firm said in a statement issued via its LinkedIn page.

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