Brookfield spends big on net zero; Court Square looks to stand out from healthcare crowd

Court Square Capital's Nguyen holds forth on healthcare investing.

Good morning, Hubsters. Craig McGlashan in London here with the Wire.

With much of the US and Europe enduring a heatwave and the US and Australia this week signing a joint partnership to boost zero emissions technology, the battle against climate change has never felt more acute. Private equity is also helping fund the journey to net-zero, in what is “a great opportunity for investment,” Natalie Adomait, managing partner at Brookfield Asset Management, told PE Hub’s Obey Martin Manayiti today.

Immense amount of capital. Brookfield closed its $15 billion Global Transition Fund last month and has already deployed approximately $2.5 billion to projects in North America and Europe. Among them are ones focused on solar power, battery technology and carbon capture and storage.

Three core themes will guide the fund: business transformation; clean energy; and efforts to decarbonize.

“We are seeing a very large universe of opportunities across all three themes,” Adomait told Obey, adding, however, that the majority of Brookfield’s deployed capital to date has gone into renewable energy. “It is by far the easiest and most investable decarbonization solution, and it is the first step for most businesses across every sector when they are embarking on a decarbonization plan.”

The amount of capital required to help the world reach net-zero by 2050 is enormous, with some putting the figure at $150 trillion.

“That’s an immense amount of capital, and it creates a great opportunity for investment to be made, where you can make not just good financial returns but also have a positive impact and be attractive to ESG investors,” Adomait said.

You can read the whole interview here.

Healthy interest. Elsewhere on PE Hub today, Aaron Weitzman spoke in depth with Court Square Capital Partners managing partner David Nguyen for the latest in our series profiling healthcare investors.

While healthcare investment is becoming a crowded area for the private equity sector, Nguyen was keen to stress ways in which Court Square differentiates itself.

“The common threads, other than size, are that we look for growth-minded entrepreneurial management teams, market leaders in their niches, and companies that lower the cost of healthcare and/or improve patient experience,” he told Aaron. “These market leaders and these growth-oriented management teams, they have to be in sectors that we think long-term, over 10 plus years, have real wind behind their backs and will be significantly larger in the future than they are today.”

As an example of lowering the cost of healthcare and improving patient experience, Nguyen pointed to its 2020 investment in Advanced Diabetes Supply, a firm that provides continuous glucose monitoring (CGM) for diabetic patients.

“The old technology used to be finger pricking and blood glucose monitoring,” he told Aaron. “CGM, which is an improved technology, helps lower the overall cost of the healthcare system and improves patient outcomes and experience. There is more real-time data for the patient, less hospitalizations, fewer comorbidities.”

Find out more about Court Square’s healthcare strategy here.

Friend-shoring. Over here in Europe, I was chatting to a partner at a PE firm who bemoaned that globalization is losing ground to populist, country-first movements such as America First and Brexit. Speaking on background, he said his firm had stopped looking at the UK for investments, as the barriers Brexit created meant that trying to merge UK companies with firms in the EU had become too big a headache.

That’s why I was interested to see a report from EY yesterday that pointed to a trend in M&A of “friend-shoring”.

“On the global stage, while there is still a strong appetite for cross-border deals, CEOs are more selective in who they do deals with, preferring to ‘friend-shore’ their operations and pursue transactions within friendly pockets rather than applying a truly global approach,” said Andrea Guerzoni, EY global vice chair, strategy and transactions, in the report.

I’d love to hear from our readers on this. Is globalization truly on the decline, or just becoming more selective? Drop me a note with your thoughts.

Before I sign off, I want to mention that this afternoon, my colleagues in New York MK Flynn and Tara Lindenbaum are attending the 5th Annual Exchange, hosted by Exponent, a collective of senior women dealmakers. MK will moderate a Fireside Chat with Kristin Johnson, managing director, Alamont Capital Partners; and Shelli Taylor, CEO, Alamo Drafthouse Cinema, a dine-in movie theater chain and streaming service backed by Altamont. They’ll be discussing how Altamont has helped guide Alamo through the challenges of the past two years.

That’s it from me – PE Hub’s Aaron Weitzman will be here tomorrow to take you through to the weekend.

Cheers,

Craig