TotalEnergies offloads climate VC portfolio to Aster and North Sky in secondaries transaction

Around 20 minority stakes in venture-stage climate companies have been moved into an externally-managed continuation fund – an uncommon structure in the secondaries market.

TotalEnergies has sold most of its corporate venture capital portfolio – consisting of approximately 20 minority stakes in climate-tech and cleantech venture-stage companies – to impact venture capital firm Aster and specialist secondaries impact firm North Sky Capital.

The transaction is in the form of an externally-managed continuation fund: Aster has taken over management of the assets and is housing them in a specially-created fund named Fonds Professionnel de Capital Investissement. TotalEnergies has a small stake in FPCI; North Sky Capital is the only external investor, providing most of the capital for the fund’s acquisitions as an LP, according to a source familiar with the fund. This is Aster’s first foray into secondaries, according to an announcement from the firm.

TotalEnergies created a venture fund in 2019 to house existing climate venture investments by the energy company and to make new investments “in technologies or innovative solutions [that] could contribute to [global] carbon neutrality”, TotalEnergies announced at the time. This fund, to be named Total Carbon Neutrality Ventures, would receive $400 million in funding over the next five years. The assets FPCI has acquired are from this fund.

Externally-managed continuation funds are uncommon in the secondaries market: they make up approximately 10 percent of the continuation fund opportunities North Sky sees, Tom Jorgensen, a managing director at North Sky, told New Private Markets.

TotalEnergies has not commented on why it is now seeking to exit these investments. However, Fabio Lancellotti, a partner at Aster, suggested reasons why corporate investors may wish to exit venture investments in a statement in Aster’s announcement: “The economic context, combined with the cyclicality of venture capital investments, create opportunities [for Aster] to take over minority positions held directly by players wishing to reposition themselves on their core activities. We want to energise the secondary market with a constructive, tailor-made approach adapted to the strategic changes of large corporates, particularly industrial ones”.

FPCI is “a relatively young portfolio and a diverse set of assets… including energy access, mobility and hydrogen assets,” Jorgensen told NPM. North Sky’s secondaries business – currently raising Fund VI, which has a $500 million target – invests exclusively in impact and sustainable portfolios. Impact and sustainability-focused strategies are growing within the secondaries markets, as NPM has been reporting over the past year.

Fund investments North Sky makes do not have to be labelled ‘impact funds’, but this label “does make it easier” for North Sky to commit, said Jorgensen, “and makes for a more efficient and streamlined diligence process”. For this deal, North Sky saw “a lot of alignment” with the other parties because Aster is a specialist impact firm and TotalEnergies’ portfolio was created to fund carbon neutrality, said Jorgensen. “The people at the table are all stewards of impact capital and will continue to manage the portfolio with an eye to generating tangible impact results and strong economic returns.”

TotalEnergies and Aster did not respond to multiple requests for comment prior to publication.