Hilversum, April 4, 2023 – Impact investor Polestar Capital today announced the participation of four new investors in the biggest circular debt fund of Europe. The Dutch state impact investor Invest-NL and the insurers Onderlinge s‘Gravenhage and De Hoop have already invested, the Province of Limburg has made its investment decision but is still in the process of formalizing its participation. The Polestar Capital Circular Debt Fund (PCDF), which has Dutch pension fund Detailhandel as its anchor investor, will then have grown to EUR 187 mln.
Circular project need finance to make an impact
With the PCDF, Polestar Capital invests in innovative circular projects with the potential to create worldwide systemic ecological impact, both by waste reduction and recycling and by the replacement of fossil fuels. This lowers the use of virgin resources, as well as carbon emissions. Often, these projects have difficulty raising enough funding. Banks usually find such projects too innovative, and for venture capitalists, they are generally too capital intensive to finance fully with equity. By closing the funding gap, PCDF allows circular production companies to prove their technologies and business models on a commercial scale. Therewith the fund paves the road for other financiers to finance the further scaling of these technologies.
Patient capital accelerates the transition
Jan-Willem König, director of Polestar Capital: “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 polluation 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.”
Pensioenfonds Detailhandel (the Dutch pension fund for the retail sector), the anchor investor for the fund with a EUR 100 mln participation, is eager to work with the new participants. Henk Groot, CIO of the pension fund: “A year ago, we have 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 realizes 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 funding gap is crucial
The new investors elaborate on why they decided to participate in the biggest circular debt fund in Europe.
Tim van Vledder, senior Investment Manager at Invest-NL: “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.”
Maarten van Gaans-Gijbels, deputy for Energy and Climate of the Province of Limburg, adds: “Limburg hosts important innovative ecosystems in the circular economy, notably the Brightlands campuses. 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.”
Seada van den Herik, managing director of insurer Onderlinge ’s Gravenhage: “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.”
Gilbert Pluym, managing director of reinsurer De Hoop: “Our mission is to allow everyone to obtain life insurance, even if they have a medical condition. The social impact we try to make with our products also translates to our investment policy, where we want to invest with more than only financial return in mind. Our participation in the PCDF is an expression of this policy.”