Green Gateway Fund 2 GmbH & Co KG (GGF2)

Green Gateway Fund II makes growth stage investments in small and medium sized businesses in Europe that offer products and services that reduce carbon emissions and other waste through greater resource efficiency or a switch to renewable power.

The Fund’s Manager, Wermuth Investment Management GmbH, supports Portfolio Companies in selling to high growth and high impact markets globally. These markets can either be in sectors expected to grow significantly in the “new green industrial revolution”, or in regions with significant catch-up potential, such as those with energy consumption per unit of GDP several times higher than, say, in Germany.

The fund typically makes investments in companies with more than €10m of revenues with The Fund’s unique selling point is its investment team’s proven ability to support Portfolio Companies in selling goods and services into growth markets at home and globally. Such growth markets are often new and need to be co-created pro-actively in cooperation with other industry players and government. To grow in high impact, high growth, high profit but also high risk regions with significant catch-up potential, such as emerging markets, requires international experience and detailed attention to risks. Both require a team with dependable relationships of trust built on a track record of working globally not just for profits but also with a positive impact for society and the planet in mind, which are difficult to replicate quickly.

Financial description

The Green Gateway Fund 2 offers an attractive risk return profile: a target net IRR > 20% pa and multiples > 2x net cash-on-cash, as well a positive impact on the environment and sustainable development.
More money for value: Up to 25% more investments due to recycling, for same amount of fees.
Given the Fund’s strategic focus on resource efficiency, the Manager sees only limited and often no conflict between the financial return and the environmental impact targets of GGF2: The more resource efficient a Portfolio Company’s products or services and the stronger its sales, the greater its clients’ and probably the Portfolio Company’s own profits and its environmental impact. The Carry Vehicle thus has accepted that its Carried Interest is not just a function of meeting a financial Hurdle, but also of meeting an aggregate Impact Hurdle on a whole fund basis based on Impact Hurdles set out for each Portfolio Company. Actual performance will be measured against these hurdles.
The Impact Hurdle has been carefully structured to ensure potential conflicts of interest between achieving financial returns and meeting the Impact Hurdle are limited. Rather, it makes it absolutely clear that while the Fund is a “finance first” impact investor, rather than an “impact first” impact investor who may want to be paid on the basis of achieving “Impact Targets”, it is without doubt an impact investor. No investment can be undertaken that will not have a positive environmental impact.