A load of manure to help solve climate woes

Investors are becoming increasingly aware of the major themes – or gigatrends – dominating our times and even private market investors are in. Urs Wietlisbach, Co-founder at Partners Group, has his eyes on a number of key trends, such as automation and digitisation, decarbonisation and new living.

Wietlisbach is particularly passionate about decarbonisation, discussing two different companies Partners Group invest in. The first is Climeworks which takes carbon out of the atmosphere and stores it in the ground in Iceland. The second, N2 Agri, takes a ‘messier’ problem in the form of cow pats which release greenhouse gases as they decompose and uses technology to neutralise the gases and convert to sustainable and nutrient-rich fertiliser.

“The world is developing lots of new things which will help stop the climate rise.”

In this edition of Expert Insights, Wietlisbach discusses two of the main gigatrends Partners Group are investing in – healthcare and decarbonisation – along with some of the interesting companies in these areas.

Key takeouts:

• Gigathemes are transformational changes extending across industries and companies, such as decarbonisation or automation and digitisation.
• Healthcare is a rising trend driven by factors such as an aging population which is supporting a range of companies such as Confluent Health.
• Decarbonisation is driven by climate change and the need for sustainable living with growing populations. There are many innovative companies in this space such as Climeworks and N2 Agri.

Edited transcript

How do you classify gigathemes?

It's things which you have a transformal change of the underlying industries or companies that you have. And we do this through thematic research.

What are some of the gigathemes you are focusing on at the moment?

One is automation, digitalisation. The other one is kind of new living. Ageing of the population is a bigger theme. And the third one is decarbonisation.

How did you identify Healthcare as an opportunity?

Healthcare is because people start to get older. That's an area which we really like. And our healthcare team, I'll give you one example, Confluent Health is a physio clinic chain in the United States. Our research has shown that through all the people, you get a lot of tailwinds also on the physio side. And this is a very fragmented market. The top 15 groups have only 12% market share. You can do buy and build. So this is why we then chose Confluent Health. We invested in Confluent Health. Two years ago, they had 170 clinics. Today they have over 500 through buy and build and earnings are from $38 million to over $100 million. So there's this typical theme. We saw it. We invested in it together with the management. We did a lot of acquisition. It's very profitable, and it's going to be a very good investment.

We are doing the same thing on eye surgery. In the United States, we do the same thing on veterinary. We bought Blue River, a big veterinary chain. We see a lot of this type of sub segments in the healthcare system.

What are the drivers behind decarbonisation as one of the gigathemes?

Decarbonisation is needed for the overall world and most governments are behind it. You see a lot of things in the renewables space. We are very strong at Partners Group on the renewables side, we do wind farms and solar, a lot in Australia as well. We do the same thing all over the world.

So that's one part we have just invested in a company called Climeworks. They actually take carbon out of the atmosphere and store it in Iceland. So this is an interesting new way, and it depends where the carbon pricing is. This company already has some positive returns on the first factory they built. We also have Blue Earth Capital. We have a capital growth fund there doing automatisation of buildings to bring the electrical use down. There are hundreds of new things being created today. Since I see all of these transactions, I'm also convinced that we are going to solve the climate problem by ourselves.

Which of your gigathemes are you most excited about?

Decarbonisation. There are a lot of things are happening there and I'm really glad to see that so much money flows into great ideas. We just have a company, Norway, they make out of cow pats, the best fertiliser in a form. And it's now working. We have already installed 50 such systems. They take the manure directly away. So you don't have methane and everything going out. Then they use a special techniques. At the end comes out the best fertiliser that a farmer can have. That excites me and that shows as well that the world is developing lots of new things, which will help to stop the climate rise.

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Partners Group are one of the largest private markets investment managers in the world. They have recently launched the Global Income Fund - Unlisted in Australia. To learn more, please visit their website.