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Why top family business dynasties are backing a Buffett-founded alternative energy group

I(x) Net Zero, an energy transition-focused investment firm founded by Howard Warren Buffett, grandson of value investing icon Warren Buffett, has listed on AIM, a sub-market of the London Stock Exchange. 

The US-based company, which Buffett founded in 2015 alongside Trevor Neilson and Pär Lindström, raised £10.7 million. 

The sum appears small but i(x) Net Zero has attracted investment capital from numerous family business dynasties and family offices (spanning 14 countries) including the Desmarais family (financiers of Montreal-based Power Corporation), Chuck Clarvit and his Clarvit Capital (former co-head of BlackRock Alternative Advisors), philanthropist Aileen Getty, of the famous oil family dynasty, and Joe Gebbia, co-founder of Airbnb.

“It was all about these families having a seat at the table,” Steve Oyer, CEO of i(x) tells Family Capital. “The amount of capital they have put into the holding company is dwarfed by the amount of capital they have actually put into the underlying companies. 

“That these families bring us deal flow means they have acted as a guiding force for how we have evolved.” 

At the heart of i(x) Net Zero is an investment thesis that backs companies developing carbon capture technologies, as the global economy realigns towards a “carbon to value” paradigm. This includes the built economy and green technology to support the construction and operation of real estate with a reduced – and eventually net zero – carbon footprint. 

The company’s mission is to align itself closely to this long-term secular trend as the world accelerates along a path of global decarbonisation. 

Oyer refers to the AIM listing as the “next step” in i(x) Net Zero’s development. 

“We have about forty significant families with a real global reach that became our shareholders. And that really propelled us into the next phase of the business.”

It has listed on AIM: “As a market that recognises smaller growth companies, and the idea that ESG and impact is something that can be fully developed within a company – and not just something that is part of their annual report.”

Because it was attracting capital from international families, the i(x) team also saw London as a way to develop a global approach.

The appointment of Nick Hurd, former UK member of parliament as non-executive chairman also made the AIM listing a natural step in i(x)’s evolutionary process. 

The company’s goal is to produce quality returns through long-term capital growth by employing positive, scalable and sustainable impact. Its focus will be to invest “catalytic capital” into companies spanning energy transition and sustainability in the built environment. 

Prior to joining i(x) Net Zero, Oyer ran Lazard Asset Management’s global family office advisory group in New York. He knew Trevor Neilson, whom he met in the early 2000s while Neilson was working for the Bill and Melinda Gates’ Foundation. He knew Buffett through his philanthropic work. Once Oyer heard what they, and Lindström, were doing he was keen to join: “It really resonated with me.”

“The approach was to align with our family office investors on areas of interest like climate change and sustainable housing. Since we’re not a fund with an LP/GP relationship, it’s not about fees. It’s more a case of, ‘Let’s find an opportunity to build something together. As the enterprise value grows, then all of our opportunity set grows’.” 

Family office deal flow 

Six platform companies have received catalytic capital from i(x) and its investors. One of these companies, MultiGreen Properties, was born out of a partnership with family office shareholder Green Mesa Capital, founded by Randy Norton, renowned for developing and operating data centres. 

Such facilities are very efficient users of energy. They rely on controlling their temperature and the energy use because the margins in data centres are thin. 

“The expertise they had in prop tech, understanding energy efficiency in the built environment, was being leveraged in the work that their family office Green Mesa was doing in the US multifamily rental space. 

“We sat down as a management team with the family office and began to look at this opportunity set and said, ‘We think we can bring the right capital and build an operating company’. 

“That’s our MultiGreen platform. It’s attainable and sustainable, tech-enabled affordable housing. We’re not building luxury apartment buildings. We’re building apartment buildings for teachers, firefighters, police officers, who work in expensive communities and can’t afford to live there.” 

The company has put $240 million of construction dollars to work, with the biggest part of the i(x) portfolio driven by energy transition. 

This includes companies such as WasteFuel, whose biorefinery projects are helping to transform agricultural and municipal waste into low-carbon fuels, renewable natural gas and green methanol. It is applying the process to land, sea and air with the aim to convert 1 million tons of municipal waste into 30 million gallons of jet fuel annually. 

Its biorefinery project in the Philippines, for example, will convert municipal waste into aviation-grade low-carbon fuel that burns with 80% less carbon emissions than regular aviation fuel. 

When thinking about how best to change the nature of fuel used in aviation, shipping and land transportation, it wasn’t about identifying the best new technology, says Oyer, but rather, ‘What’s the best feedstock?’ 

“And then, in classic project finance methodology, we embarked on a mission to find the optimal off-take agreements that would allow us to finance projects with proven technology. That’s how WasteFuel evolved as a project development company. By having the right strategic partners like Maersk, Prime Infrastructure and NetJets, it meant we could bring the pieces of the chessboard together and start to build WasteFuel at scale.” 

Trevor Neilson is one of the co-founders of WasteFuel, where he holds the role of CEO and Chairman. 

One of the strategic objectives at i(x) Net Zero is to cross-pollinate its portfolio companies to facilitate collective growth at scale. Key to achieving this is integration and will play a key factor in any future company investments made by the team. 

Oyer explains: “WasteFuel is working with one of our other platform companies Enphys Acquisition, who are going to have a huge footprint in Latin America. Renewable biofuels are going to be part of the solution that complements wind and solar. They will be the power for keeping the carbon footprint as low as possible in these installations. 

“What we’re trying to do is grow the asset value of our platform businesses and be very selective about things that work to improve the approach we take.” 

Coming to AIM was not an exit event for i(x) shareholders “but a democratisation event that we talked about from the beginning of the company”, he says. 

“From the outset, the founders always believed that there was an opportunity to allow for every scale of investor to have access to institutional-quality returns with scalable impact, with the alignment of interest embedded in a permanently capitalized holding company that is now publicly traded. 

“You’ll see us continue to grow our companies, integrate opportunities, and be selective about expansion. Institutions want to take larger stakes in the opportunities that we’re building, because they believe in the same type of long-term scenarios that we see in areas like energy transition,” concludes Oyer. 

 

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