Redwheel has agreed to purchase the assets of sustainable investor Ecofin, which focuses on sustainable infrastructure and environmental solutions.
Assets under management for Ecofin, an affiliate of Tortoise, totalled $1.4bn at the end of May. Three decarbonisation-focused strategies, including renewable infrastructure, electrification and energy efficiency, will become part of Redwheel, as well as bringing over 14 Ecofin team members based in the US and the UK. Currently, Redwheel manages about $100m in a Climate Growth Tech Capital fund launched earlier this year with Turquoise.
Redwheel aims to finalise the deal with Tortoise Capital, formerly TortoiseEcofin, by the end of the third quarter.
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Tord Stallvik, CEO of Redwheel, told Portfolio Adviser, that although there have been negative flows to sustainable funds in recent months, this should be considered in the general picture of rough period for active equities.
“The fact that in a moment in time when so much of the equity market is focused on passive and focused on such a narrow group of companies, the fact that many other parts of the market aren’t being supported doesn’t mean that they aren’t interested in the long term.
“I think that there’s this incredible imbalance right now in markets in general. It’s just ridiculous how much correlation there is between what everybody owns and what everybody keeps buying. I think that just looking at that and going, ‘We can be a big contrarian because we know who we are. We know what we want to focus on. We have a clear strategy’.”
Stallvik said he wanted to stay away from investing that claimed sustainability “simply because you have a bunch of tech stocks that have low carbon footprints”, and focus on fundamental changes. This is where he saw the value of Ecofin.
“They’re focused on specific areas within the energy transition, sustainable infrastructure and renewable energy, where we can see a lot of evidence that investors are are interested just on the fact that this economic transition that’s happening is creating a lot of opportunities in specific areas like these,” Stallvik said.
“It’s a very experienced team, doing something that we think is highly relevant considering the overall economic backdrop, and it fits within our strategic imperatives around the types of strategies that we want to be offering for people.”
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Ecofin president Brent Newcomb said the business is split equally between retail clients and institutions, with products offered through a variety of vehicles including an investment trust.
“It all starts from the nucleus of this six person investment team who have always done this. They have been working together on average, probably more than 10 years,” Newcomb said.
“At this point, they have all dedicated their careers to understanding this space in the dynamics of what’s happening, and they’ve seen the cycles that we’ve been through. And that’s really what’s resonated with clients, and I think that’s what resonated with with Tord and his team at Redwheel.”
The deal will also expand Redwheel’s presence in the US. Stallvik said clients in the US are currently mostly focused around endowments, foundations and pension funds, but the access through Ecofin will add to the wealth space.
