With surging oil and fertiliser prices since the blockade of the Strait of Hormuz, Paris-based Mirova, an affiliate of Natixis Investment Managers, said the firm will launch two new funds - one focused on regenerative agriculture in Europe and another on energy transition in Asia.

Raphaël Lance, head of Private Assets at Paris-based Mirova, told this news service in an interview on Friday that they will he launching a new fund focused on regenerative agriculture in Europe in September and one on the energy transition in Asia by the end of the year.

Mirova has a range of ESG-focused funds covered by Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR), including ecosystem conservation, biodiversity and sustainable agriculture, with investments ranging from precision agriculture, regenerative agriculture and technologies to reduce emissions from the sector. There are also six Mirova energy transition funds.

“The energy transition is the core of what we do,” Lance told this news service. “Eighty per cent of our assets are in the energy transition, mainly in infrastructure, notably electrification. The energy transition was driven by climate change but now it’s also about energy independence, after the conflicts in Ukraine and in Iran, which have caused oil prices to surge,” he said.

“We will launch a new fund focused on the energy transition by the end of the year. It will focus on solar, wind, storage, electric vehicles in India, the Philippines, Taiwan, Indonesia and Thailand. Asia is a booming market from an energy point of view. We know the market and it will continue to grow,” he continued.

“Most of our energy-transition focused funds are in Europe, with good returns, focused on charging stations, hydrogen taxis, electric buses, for instance, such as Mirova’s OECD-focused Energy Transition funds," he said. “Investing in energy transition is not just useful, it’s essential. Developing renewable energies, low carbon transportation and energy efficiency are the main levers that will do a lot to help meet the goals set by the Paris Agreement.”

After joint US-Israeli attacks on Iran sparked a conflict causing oil prices to surge, Edmund Shing at BNP Paribas Wealth Management also believes that the increased need for energy security has accelerated the energy transition.

Lance is also launching a new fund focused on regenerative agriculture in Europe in September. “In agriculture, we are mostly invested in emerging markets to enhance practices and productivity,” he continued. Regenerative agriculture minimises or eliminates the use of synthetic fertilisers by prioritising natural nutrient cycling and soil biology. Instead of chemical inputs, farmers build soil fertility using compost to cover crops. 

Lance also uses a lot of blended finance. According to a definition from the London School of Economics (source: LSE, Grantham Research Institute on Climate Change and the Environment, 30 November 2022), blended finance is "the strategic use of public sources of capital to attract private investment in developing countries. It entails blending public capital such as Official Development Assistance (ODA) or funding by development financiers with private capital." Public funds are usually offered on more attractive terms than the prevailing market conditions, and are used to de-risk investment projects to mobilise additional private capital.

Lance is optimistic about the outlook for private markets, saying they offer good returns, good portfolio diversification and are a hedge against inflation. See more about Mirova and sustainable investing here.   

Paul McMahon, a co-founder and managing partner of asset manager SLM Partners, also believes that there has been higher investor interest in regenerative agriculture and forestry recently. He believes that it has the potential to grow, and sees it as a real investment opportunity. See more here.