Longterm investment strategies across all asset classes (REEF)
REEF, the Resource Efficiency and Energy Firm, has been set up to long-term sustainable investments in the champions of the green industrial revolution across all asset classes, with a positive impact on the environment.
It has been set up in Berlin as a limited liability company (GmbH), providing permanent capital for truly long-term investments in a so called “evergreen structure”. Once there would be sufficient share capital to ensure a certain degree of liquidity on the market, shares shall eventually be listed to allow investors liquidity by buying or selling shares in REEF. The structure is thus similar to Warren Buffet´s Berkshire Hathaway.
REEF is initially investing the Wermuth family’s, but will welcome other institutional and private capital in the future to be invested alongside the family office funds. REEF aims to offer a one-stop multi-asset class solution for investors seeking to achieve positive impact across all asset classes and looking to benefit from the strategic information we gather from our green growth investments.
A few examples of how investments in the green growth fund could impact overall asset allocation and returns for REEF:
Assume we identified a company in our green growth fund which could produce twice as much power from household waste, with much less hazardous side effects. This might be a good investment for the green growth fund but it would always be limited in size and return (say at most 10s of millions of Euro=, but if the technology was applied to existing incinerators, the value of their power output could double and the environmental fines fall significantly, such that otherwise uninteresting incinerators worth billions of Euro could become a very attractive infrastructure investment, potentially doubling in value and generating billions of profits.
Assume we identified a company offering solar wafers at 50% lower cost, making solar power competitive in a country which was previously in financial distress, and ensuring commitments to large power plants which would much reduce the cost of power and enhance the balance of payments of the country in question. Its bonds may thus end up offering a very attractive risk/return profile as the market would tend to consider it a country in distress, demanding high interest rates, while the long-term outlook is very positive. On the other side of the medal, bonds from oil producing nations like Brazil, Mexico, Indonesia or Russia might be quite risky the more competitive renewables get and could present a great short target.
Aside from aiming for outstanding risk-return profiles, REEF will aim to make a major contribution to reducing global CO2 emissions. We believe the current situation, with low cost of financing and competitive renewable power in many places on earth presents a unique opportunity to roll out renewables and resource efficiency at scale. We estimate that with Euro 20 billion in equity, one could end up initiating Euro 1 trillion worth of renewable power projects over 30 years, if one were able to get 7x leverage at the project level and recycled capital 7 times over the period. Given today’s technologies and energy mix this could lead to a cut 1% of global emissions.
We are thus looking for partners to scale up REEF given significant and we see for such a product.
DIVERSIFIED ASSET ALLOCATION ACROSS ALL ALTERNATIVE ASSET CLASSES: