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In brief: IMCO’s transition bet on batteries

The Canadian investor made its first full acquisition to position itself for sustainable long-term growth.

The deal: The Investment Management Corporation of Ontario is establishing a foothold in what is forecasted to be a fast-growing subsector in the world’s transition to clean energy, with its purchase of battery storage developer Green Frog Power.

In the Canadian investors’ first 100 percent acquisition of a company, IMCO committed up to C$500 million ($398 million; €339 million) to acquire UK-based Green Frog. IMCO, which launched in 2017, described the company and its pipeline of utility-scale battery projects as a “marquee addition” to the pension investor’s infrastructure portfolio.

Important background: Electrical grids still face weather-related intermittency risks from renewable power generation. Many utility companies are reluctant to completely shut down natural gas power plants in case the need arises for backup generation. Developing the capability to store power generated by solar and wind farms is seen as a critical part of fully transitioning energy systems away from fossil fuels.

Why IMCO? The C$73.3 billion investor is new to private markets and is building out a portfolio of assets well-positioned to take advantage of long-term future growth. “It’s really important to position yourself for success in this transition,” Tim Formuziewich, head of IMCO’s infrastructure group, told us in a story last week about climate-focused investment strategies.

IMCO recently committed an undisclosed amount to Brookfield’s Global Transition Fund, which has raised $7 billion so far to invest in reducing the emissions of carbon-intensive industries.