A well-crafted contrarian investment approach isn’t contrarian at all. 

Contrarianism may be espoused by purchasing what the late Charlie Munger famously labelled “cigar butts” – burnt-out companies, sectors or themes trading cheaply and where short-term value may (or may not) be realised for “one last puff”. However, we see better risk-adjusted potential in best-in-class management teams that are laser-focused on durable long-term value creation. Therefore, we prefer to paraphrase the investor Nick Sleep: contrarianism is the simple act of focusing on the inputs required for success and ignoring what is irrelevant.

We seek a long-term approach to value creation for each prospective investee company, then aim to limit our duration risk against strong pools of value. Within each opportunity, the idiosyncratic barriers to scaling the business should be resolved well within the tenor of our senior-secured debt facilities. Originating such opportunities is a challenge: it requires an investment team with deep experience in repeatedly developing esoteric credit solutions in climate-solution industries. Only by drawing from a library of career relationships, networks and experiences can a team deliver the efficiency, certainty of closing and resourcefulness to meet investee requirements. 

By combining a relentless focus on risk-adjusted value creation, capital preservation and authenticity of purpose, our approach may appear contrarian in today’s sponsor-driven private credit market – particularly as many market participants are increasingly wary of ESG or sustainability claims.

Far from seeking contrarianism in its own right, we welcome others to join us on this journey: global success in overcoming the climate challenge is only possible via broad participation and a just climate transition.