SWEN closes Blue Ocean Fund on €170m

The ocean impact fund exceeded its €120m target and its structure means SWEN could forfeit 50% of its carried interest it if fails to hit certain impact KPIs.

SWEN Capital Partners has closed its Blue Ocean Fund on €170 million, exceeding the impact fund’s €120 million target. The fund had a €200 million hard-cap.

The 2021-vintage vehicle will make investments aimed at regenerating the ocean by targeting the three “existential threats” of overfishing, pollution and climate change.

Blue Ocean Fund managing director Olivier Raybaud told Agri Investor that fundraising was aided by its carry structure, which means the firm could forfeit 50 percent of its carried interest if it fails to hit certain impact KPIs, its niche ocean-based investment theme and wider LP demand for impact vehicles.

“When we started to work on the thematic in 2018 and we were starting to build the strategy, clearly that was unheard of in 2018,” said Raybaud.

“There was no VC fund in the world specialized on ocean health. This is a thematic that is growing and we see now a number of other funds that have popped up with that thematic, and LPs are interested.”

SWEN will measure impact KPIs using a two-layer approach, the first of which is applicable to all investments its makes and measures elements such as quantity of biomass preserved, quantity of pollution diverted from the marine environment and tonnes of CO2 equivalents saved.

The second layer of impact KPIs are specific to each individual company. In the case of an aquaculture feed company, for example, SWEN would measure “the physical feed conversion ratio which represents the quantity of fishmeal that has been saved,” managing director Christian Lim told Agri Investor upon the vehicles €52 million first close.

“These are developed for each company and out of these two sets of KPIs a selection will be used to calculate rates of achievement of our impact objectives – and from this core will depend 50 percent of our carried interest,” Lim said. He added that impact data will be examined and verified by an independent impact committee.

Raybaud said the fund’s focus on overfishing, pollution, and climate change means “everything we’re doing is linked to improving biodiversity in the ocean.”

“We invested in a company called NatureMetrics, which is working on environmental DNA,” said Raybaud. “This environmental DNA technology could be used to [directly] support biodiversity credits. It’s a way to measure biodiversity in a specific ecosystem in a very cheap and repeatable way. So that’s the perfect tool for developing biodiversity credits.”

The strategy targets 20-25 portfolio companies across a five-year investment period, but has already made nine investments and could work to a shorter deployment period.

Investors into the fund include insurance firms MACIF, MAIF, Abeille Assurances; banking group Crédit Mutuel Arkéa; French Public Investment Bank (Bpifrance), and the Prince Albert II of Monaco Foundation.

SWEN Capital Partners has €6.7 billion in assets under management or in advisory in Europe, according to the firm’s website.