April 24, 2023
Reusing, reducing, and recycling; carbon neutral policies and green technologies are today critical considerations that can directly impact a company’s attractiveness, reputation, and valuation. Regulatory requirements and changing consumer attitudes are among the factors contributing to this seismic shift in how companies operate now and into the future.
Factors that might not have been as important a decade ago can now create reputational challenges and even financial risks for M&A buyers. This means that increased scrutiny in the assessment of a target’s ESG performance and trajectory, carbon neutral policy, plans and strategic intent are imperatives in determining the future sustainability of a company and its value.
Tanguy du Chesnay, a partner at Translink Corporate Finance France, says that companies can no longer avoid taking ESG requirements and opportunities seriously. “ESG approaches and green tech have evolved from a nice to have, to a must-have policy,” he says, adding that technology used in data collection and analysis are now key to the performance measures companies need to implement to sustain their greener ambitions.
“Relying on science-based targets and data is going to become more crucial to avoid any potential negative / greenwashing sentiment and to be able to document the real impact companies are having on the planet,” he says.
Forward-thinking companies have a commitment to driving a positive impact on the planet whilst ensuring profitability for shareholders. Translink CF fully supports this connected value creation approach and has identified M&A and fundraising advisory in the rapidly evolving Energy and Environment industry group as a key focus, with du Chesnay heading up the group. “This strategic move reinforces our dedication to providing bespoke solutions that not only create value for our clients, but also align with our ethos of sustainability and environmental stewardship,” says du Chesnay.
An alignment of values and ESG positioning
Du Chesnay says that while the quality of the target and the target’s fit with the business is still the most integral part of any M&A deal, passive planning on the part of a target when it comes to their ESG objectives could mean losing out on a potential deal altogether. This is particularly relevant given that the near future will see the inevitable addition of even stricter compliance requirements globally and increased citizen and consumers green beliefs.
Having already concluded several deals within the green- and climate-tech space, du Chesnay says that while it is still a niche market, it’s one that is moving fast and that is infusing in more traditional industries. Combining what is important for the planet with business opportunities is a new industry win-win, with the latest of these deals illustrating the ability to balance concerns about the environment with a demand for shareholder return.
Recent green tech deals that Translink CF has advised on include:
Seeing the wood from the trees with EcoTree
EcoTree is a new form of forestry investment platform that enables individuals and companies to own trees to help tackle climate change through pro-active and sustainable forestry. Advised by Translink CF France, EcoTree was able to raise €14 million through new partners Société Générale Ventures, Financière Fonds Privés and Famae Impact.
A new kind of renewable electricity and agritech with Ombrea
Ombrea is a cleantech established in 2016 that designs and sells agrivoltaism solutions which allows to produce electricity from photovoltaics structures established above agricultural land. The moving panels and sensors equipping the whole system also provide useful information and data to the farmers, allowing them to protect and better develop the culture. Tanguy du Chesnay assisted the founding family in raising €7m from impact fund Mirova, the venture arm of CMA CGM, the Einaudi family and banks.
These two recent deals are examples of startups that provide sound environmental solutions that are financially attractive and that can find suitable funding to scale, a sector with great opportunities. Translink CF France is currently advising some start-up and larger scale-up for M&A transactions in the fields of carbon sinks development, plant proteins, production of bioplastics from algae, and others green IT or innovations in the energy environment.
Investments in climate tech in France in 2022 exceeded expectations and reached a new high of €3.4 billion, an increase of 50% compared to 2021, and almost three times the level in 2020. “This is a clear illustration of the accelerating maturity of the developed technologies and industrial ventures changing in scale,” du Chesnay says.
Du Chesnay summarises three main trends within the ESG space as being:
- Pure players and green initiatives: These are the green and climate tech companies whose mission is to find solutions to decarbonise industries.
- An extension of historical businesses: These are traditional businesses that need to develop greener solutions. To do so, they establish new internal divisions or teams with green tech capabilities, or they buy a target company to help fulfil this role and transition.
- M&A transactions now encompassing environmental trajectory and due diligences, such as those detailed above.
There remains a large number of ongoing initiatives and tech solutions, based on individual ideas, academic and R&D ventures, with some incentivised by grants, contests, subsidies, and others needing to source finance.
Headquartered in Paris, and with an office in Bordeaux, Translink CF France is an independent mid-market M&A advisor, French office of the Translink CF global network. Founded 11 years ago, Translink CF France puts the emphasis on its entrepreneurial DNA when it comes to advising its clients.
Climate tech in numbers globally
- According to Climate Tech VC, climate tech companies raised +$40 billion across 1,000 venture and growth deals in 2022.
- Carbon and built environment are emerging stars, multiplying 2.4x and 3.8x in funding respectively since 2021.
- 2,000 investors joined more than 1 climate deal in 2022. Of those, 613 invested in more than 5 climate deals last year.
