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Green company in Danske Invest funds gets capital injection from oil company

A green company investment, which Danske Bank Asset Management has invested in through a green bond, has been able to attract one of the largest major oil companies in the world.

The Swedish investment firm Baseload Capital that focuses on production of clean electricity via geothermal energy, has a new strategic investor. Rather surprisingly, the new investor is not a green or sustainability focused company but one of the ‘black’ oil companies, Chevron Technology Ventures.

Four Danske Invest corporate bond funds are invested in Baseload Capital through a green bond investment: Danske Invest Euro Corporate Sustainable Bonds, Danske Invest Global Corporate Bonds, Danske Invest Euro Sustainable High Yield Bonds and Danske Invest Nordiske Virksomhedsobligationer.

Baseload Capital

Baseload Capital is a specialized investment entity that funds the deployment of heat power worldwide. The company currently has subsidiaries in Iceland, Japan, Taiwan and USA, which work with local communities and power companies to permit, build and commission heat power plants.

Andreas Dankel, Head of Fixed Income at Danske Bank Asset Management is very pleased with the announcement of the new investor in Baseload Capital as he considers it a great move in the right green direction.

“It is great news that this rather un-known, unlisted company has been able to now attract also one of the oil majors. Chevron is a controversial name in our view but they are experts in oil drilling and their knowledge is useful when drilling for geothermal water. It is a testimony to Baseload Capital’s business model and the underlying technology. I’m fascinated that we, as investors, see increasing examples of how we are able to support a green transition in this way,” says Andreas Dankel.

Finding companies with great sustainability credentials

In March 2019, Andreas Dankel and his team decided to invest in a large portion of the small, inaugural bond issue totalling 500 million SEK in a small sustainability-focused company through a green bond issuance.

The investment in Swedish Baseload Capital was rather unconventional as the company was young, unlisted and lacking a public credit rating. The investment would be considered illiquid and above average risk. Nevertheless, Andreas Dankel was quite certain that it was a good investment.

“I liked the bond structure, the coupon and the team behind the company. The investment also made a lot of sense in relation to pushing the sustainability agenda forward, via the bond market,” Andreas Dankel explains.

Attention from large investors

Just before the actual issuance, Baseload Capital announced that one of their major investors would be Breakthrough Energy Ventures - an American organisation with an aim of accelerating innovation to tackle five global challenges, including how electricity is produced.

Breakthrough Energy

Established in 2015 by Bill Gates and a coalition of private investors concerned about the impacts of accelerating climate change, Breakthrough Energy supports the innovations that will lead the world to net-zero emissions.

And now Chevron Technology Ventures has entered the list of shareholders in Baseload Capital. Along with Breakthrough Energy Ventures and Gullspång Invest, Chevron Technology Ventures has added a capital injection of USD 25m.

Chevron said in the press release after the announcement:

“Chevron’s investments in geothermal power reflect our ongoing focus on helping to advance the world’s transition to a lower-carbon future," said Chevron's Vice President, Innovation and President of Technology Ventures, Barbara Burger.

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