Partner Dag Broman and his team at Tesi’s portfolio fund Alder are looking at circular economy through the sustainability prism.“We believe sustainable companies are more likely to be successful,” Broman said in an interview. “When we look at new opportunities there has to be clear environmental benefit.”
When Alder raised its first fund during the darkest days of the last financial crises in 2008–2010 the world around the company was very different from 2019. The team went through more than 300 investor meetings to raise the fund. Many investors had burned money in cleantech bubble and others thought that focusing on sustainability would mean giving in on profits.
“Most investors, when we started, pictured a contradiction,” said Broman. “Now investors are looking us up. We have a track record and that is unique.”
Alder’s first fund invested in 9 fast-growing profitable Nordic companies making annual revenues of more than 10 million euros. “They need to prove us that they can have a defined market and make money,” said Broman.
Alder has five of these companies in its portfolio, coming from Sweden and Finland. The second fund, which saw its first close in March 2018, has invested in one company so far.
Like with many other investors, people running the company are crucial for Broman and his team when they make decisions on investments. “In most of the cases we have sort of invested in the management which we feel confidence in and then we want to make the growth trip together with the management.”
Recycling and careful use of resources
Even though circular economy is not in the focus, the angle comes strongly in in some of the Alder investments – like Scanacon, that improves the finishing process for metal producers, enabling them to recycle acids and to significantly reduce hazardous effluents and waste from the process. “This is one of the factors in a sustainable company that they think in these terms, along these lines,” said Asa Mossberg, head of ESG/Sustainability strategies at Alder.
Or with SATEL – a satellite communication equipment company that makes sure that the customers can upgrade their current equipment instead of buying new. “I would say the whole taking care of resources and using them carefully is very well integrated in the whole thinking at the company,” said Broman.
Many of Alder’s investments are traditional sort of industrial companies that have a tendency to focus the sustainability issues.
Thinking sustainable is strong in the Nordics
Focusing on Nordics makes all the sense in the world if you invest in sustainability-related companies. “If you compare companies from the Nordics to the rest of Europe, the U.S. or Asia then you have a big difference,” said Broman. “We are especially well developed in the Nordics in thinking green and thinking sustainable.”
Broman and Mossberg are certain that eventually success of the companies will boil down to sustainability argument – it might be defined as circular economy, but not necessarily always so.
“If you want to build the long-term value of the company it has to be sustainable. Because they are resilient to megatrends that we see in the future such that resource scarcity which is relevant for circular economy and then climate change, demographic changes as well,” said Mossberg.
Alder Fund 1 AB
What it is: A Nordic private equity fund with the goal of creating good opportunities for sustainable technology companies to accelerate growth and strategic development.
Where: Based in Stockholm. Five partners, a team of 11.
Funds: 2 funds raised. Currently 6 companies in portfolio: Scanacon, Aidon, Gasmet, Nordic Water, Satel, Umia.
Web pages: www.alder.se