Swedish investor Locus Energy, a portfolio company of SEB Nordic Energy Fund, has partnered with VALOR to identify and acquire renewable energy production assets that can be enhanced to accelerate Finland’s green transition.
Locus Energy is currently building a Nordic portfolio of renewable energy assets, with the goal of leveraging its expertise and resources to expedite the green transition in Finland, Sweden and Norway. Their target is long-term ownership of the acquired assets.
“Our primary focus is on hydropower, wind power, district heating, grid and battery storage, with solar power serving as a complement to these in hybrid settings,” says CEO and Co-founder Niklas Sörensen.
The company is jointly owned by Locus Infra and SEB Asset Management’s Nordic Energy Fund, one of the largest asset managers in the Nordic region. Through the fund, established in 2022, Locus Energy has access to long-term capital from Nordic institutional investors. The fund is classified as an Article 9 investment vehicle under EU sustainability regulations (SFDR), implying that sustainability is at the backbone of all investment activity, which in practice translates into a focus on renewable energy assets with a further improvement potential to drive the green transition.
“The fund’s target is to reach 15 billion SEK across the Nordic countries. The evergreen structure provides a long-term investment horizon, which is essential for sustainability upgrades. The key is to identify assets that align with our investment strategy,” Sörensen explains.
Boosting local energy production
Mattias Söderqvist, Partner, emphasizes that their investment philosophy differs slightly from that of global infrastructure investors that often focus solely on larger portfolios. Locus believes that a robust local energy network enhances overall energy supply resilience while also creating local employment opportunities.
“Current owners of small-scale energy facilities often lack the available funds or time to develop and upgrade their production facilities. That is where we can step in to accelerate the transition by working hands-on to implement improvements and invest in upgrades and modernisation to increase output immediately,” Söderqvist says.
To measure progress, Locus employs its own metrics, such as Local Return Rate (LRR) and Green Return Rate (GRR), in addition to the more commonly used Investment Return Rate (IRR).
The Local Return Rate reflects the value to the local community in terms of enhanced energy supply, resilience and job creation. The Green Return Rate measures the benefits of modernising existing facilities rather than replacing them with new ones, which Locus believes is a more sustainable approach.
Recent acquisitions in Finland
Locus has recently acquired two facilities in Finland – Mäkelänkangas hybrid wind and solar park outside Hamina municipality and Vatajankoski hydropower plant in Kankaanpää municipality – with the assistance of VALOR Partners.
In line with Locus’ operating model, an optimisation plan will be implemented. This includes refurbishing assets and preparing for additional investments at the hybrid park, along with a technology upgrade and the installation of a fish passage at the hydropower plant, which was built in the early 1900s and last modernised in 1952.
“VALOR has been an invaluable partner, proactively identifying potential investment opportunities and leading discussions with local stakeholders. They fulfil an important role that we currently don’t have in Finland within our own organisation,” Sörensen highlights.
He adds that VALOR’s Kalle Ahlstedt and Jonas Seemer, along with their team, are well-connected in the market, enabling them to quickly identify prioritised opportunities, which is a significant advantage for Locus as an investor.
From individual transaction advisory to holistic partnership
The partnership between the two companies began with VALOR assisting Locus in establishing a market presence through financial advisory around specific transaction opportunities. It has since evolved into a broader role, with VALOR supporting Locus’ development plans, interacting with local partners and providing market insight in addition to the continued role of transaction advisor.
“We fully trust them to represent us in the Finnish market, as we share the same values, which we greatly appreciate,” Söderqvist says.
Locus Energy is currently exploring potential acquisitions in Finland with the help of the VALOR team. While all types of small-scale sustainable energy assets are of interest, particular attention is currently placed on district heating and wind power as well as existing hydropower, where Locus sees significant upgrade potential.
“In general, our experience of conducting business in Finland has been straightforward, characterised by direct communication and a willingness and flexibility to address challenges as they arise in transactions,” Söderqvist says.
Sörensen adds that VALOR has been essential in making this process work. Their unique approach, offering a comprehensive range of services, local connections, expertise and flexibility, has facilitated the rapid establishment of Locus Energy in Finland.