Eurazeo launches €300M maritime fund to boost decarbonization

French investment company Eurazeo is launching a sustainable maritime infrastructure thematic fund to finance more environmentally friendly infrastructure and technologies in the maritime sector that support the transition to a low carbon economy.

Illustration. Image by Kees Torn on Flickr under CC BY-SA 2.0 license

In support of the maritime decarbonization, the fund will mainly finance three types of infrastructure — ships equipped with advanced technologies that negate or curtail environmental harm, innovative harbor equipment, and assets that contribute to the development of offshore renewable energy.

Specifically, the fund will support around fifty European facilities that will back the transition of the maritime economy to become carbon neutral by 2050 and in line with the ambition announced in the European Green Deal.

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Several renowned sovereign and institutional investors have already confirmed their involvement in the fund, which has a target size of €300 million, according to Eurazeo.

The fund, which will be managed by Idinvest Partners, offers investors with a limited risk appetite a highly desirable solution thanks to its asset financing operations, which will generate quarterly distributions from rents received on maritime assets. The fund will directly own these maritime assets to further limit risk. As such, the fund will benefit from solvency capital requirement of less than 10%.

Since January 1, 2020, shipping companies must significantly reduce their emissions under the International Maritime Organisation’s (IMO) new regulation on the reduction of the sulphur content of fuels (to 0.5% from 3.5%). This regulation is part of the IMO’s worldwide strategy and aims to reduce the shipping industry’s total greenhouse gas (GHG) emissions by at least 50% by 2050, relative to 2008 levels. The fund will contribute to the reduction of GHGs as well as sulphur oxides (Sox) and nitrogen oxides (NOx) emissions, which are particularly harmful to air quality.

The emissions reductions achieved by the fund’s investments will be measured through quantitative indicators. The methodology used has been reviewed by independent experts and the assessment of the emissions reductions will be subject to an annual external audit.

The LuxFLAG1 label was awarded to the fund in January 2020. The label reflects the consideration of ESG criteria at every stage of the investment process.

As explained, the fund will have the objective of pursuing sustainable development within the meaning of Article 9 of Regulation (EU) 2019/2088 (known as the “Disclosure Regulation”) and will participate directly in the deployment of the group’s ambitious ESG strategy.

“Eurazeo is particularly proud to present to its investors a solution that meets Article 9 criteria. Many investors are in search for an investment program that has a concrete impact in the decarbonisation and the ecological transition. Eurazeo Sustainable Maritime Infrastructure thematic fund distinguishes itself by a reinforced protection of the capital,” Christophe Bavière, member of Eurazeo’s Executive Board, commented.

“Our new fund is a financing tool that will contribute to the reduction of greenhouse gas and sulphur, reduction measured audited by independent experts, then communicated to our investors,” Sylvain Makaya, Partner, said.

“Its implementation, the process of which has been evaluated with full transparency by independent organisations, underlines our aims and ambitions to deploy meaningful funds that provide a response to the environmental and climatic challenges of our time.”