Macquarie Asset Management (MAM) has ventured into the sustainable aviation fuel (SAF) industry, investing up to €175 million (A$290 million) in Netherlands-based SkyNRG. This investment marks a strategic move by Macquarie to build production facilities in Europe and the United States.
For more than two years, MAM has been exploring opportunities in the SAF sector. It is a sector gaining momentum as airlines increasingly seek green fuels to meet emissions targets.
Mark Dooley, MAM's global head of green investments, acknowledged the challenges in finding a suitable investment in this industry, primarily dominated by oil and gas majors.
Macquarie's strategic vision and SkyNRG's role
SkyNRG supplied the world’s first commercial flight using SAF in 2011 and up until recently, its focus was on trading, advisory services and research & development. The company now plans to establish production facilities by 2030, with Boeing (NYSE:BA) and KLM as key offtake partners, committing up to €4 billion for long-term SAF purchases.
SAF, produced from biomass like cooking oil and agricultural residues, can significantly reduce CO2 emissions in aviation. Dooley expressed confidence in the sector's growth potential, emphasising room for both smaller players like SkyNRG and large oil and gas corporations.
Green investment strategy and future prospects
This investment is part of the new Macquarie GIG Energy Transition Solutions Fund (MGETS), targeting a US$2 billion (A$3.1 billion) investment with an internal rate of return of 13-15%. While MAM remains discreet about its fundraising plans, it has been actively investing in emerging green technologies like battery storage and green fertiliser.
MAM's strategic shift divides green investments into established and emerging technologies, with the new fund focusing on the latter. This approach aims to tap into the evolving market dynamics where technological risk is minimised, and asset classes are ripe for re-rating.
Dooley highlighted MAM's role as an active shareholder and board member, aiding companies in organisational development and maximising enterprise value. MAM continues to support companies in realising their potential, evolving from a hands-on role to a strategic partnership approach.