Our Managing Partners Navin Chauhan and Eduardo Monteiro were pleased to speak with Shaun Beaney at Preqin for their latest First Close Q&A piece - 'Investing in the energy transition, private markets, and the ‘missing middle’.
The article highlights a critical challenge they see firsthand: while capital is abundant at the venture and large-scale infrastructure ends of the spectrum, growth-stage energy transition assets often struggle to access appropriately structured capital.
In today’s macroeconomic environment, where public markets are volatile and traditional financing channels are tightening, private markets have an increasingly important role to play in bridging this gap and enabling scalable, resilient energy solutions.
We believe addressing the “missing middle” is not just an investment opportunity, but a necessary step in delivering the infrastructure required for a secure, affordable, and decarbonised energy system.
Eleanor Fraser-Smith, Head of Sustainability at Victory Hill Capital Partners, says adaptive decision-making is essential to handling the messy, systemic realities of sustainability.
In the race to showcase climate credentials, companies and investors risk falling into what might be termed ‘greenskimming’. Unlike greenwashing, which implies deliberate intent to mislead, greenskimming stems from genuine ambition to ‘do the right thing’ without fully grappling with the messy, systemic realities of sustainability. The outcome is overconfident claims that unravel under scrutiny, leaving organisations exposed to reputational and regulatory risk.
We see this play out in multiple ways. Some Sustainable Finance Disclosure Regulation Article 8 funds might overstate their ‘impact’, glossing over hard constraints in their portfolios, while companies might find themselves making net zero pledges without mapping scope 3 supply chains. Voluntary carbon markets have amplified this problem. Buyers with the best of intentions purchase offsets, only to discover that projects, whether rainforest protection schemes or cookstove initiatives, prove ineffective or short-lived. So, what was intended as climate leadership becomes reputational liability.
Amid ongoing market volatility and the increasing urgency of the net-zero transition, infrastructure investors eager to fund renewable energy projects are surprisingly sitting on record levels of dry powder.
Just as an engine needs a mechanism to inject fuel, the transition requires a process for delivering capital, alignment, and capability at the right time and place to accelerate results. We believe this acceleration will only happen when the key stakeholders behind the energy transition, developers, investors, and policymakers, are more aligned in their efforts to bring high-impact projects to life. We believe a private equity initiative in infrastructure investment is needed
AI’s power demands are transforming the midstream sector from a “background utility” to a “strategic linchpin” particularly in the US, thanks to an abundance e of reserves, argues Victory Hill’s Richard Lum.
The energy transition is not driven solely by policy but by market forces that are becoming increasingly difficult to ignore. By Eleanor Fraser-Smith
The global investment landscape is shifting, particularly in the US, where recent political changes have intensified opposition to environmental, social and governance (ESG) principles. Deregulation efforts, withdrawal from international climate commitments, and increasing hostility towards sustainability-focused investment suggest a potential slowdown in regulatory support.
But while these developments present immediate challenges, they do not alter the structural forces driving the transition towards a more sustainable economy. Investors, businesses and policymakers across the world remain focused on the energy transition, not driven by ideology, but because the financial and economic realities make it a necessity.
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