KKR, a global investment firm, has invested about $750m to help scale Zenobē, a transport electrification and battery storage solutions firm, to accelerate the decarbonisation of diesel fleets and provide grid services that are critical for the decarbonisation of the energy sector.
Infracapital, the infrastructure equity investment arm of M&G Plc will invest further alongside the management team. KKR and Infracapital will become joint majority shareholders. The transaction is subject to customary closing conditions and regulatory approvals.
KKR’s investment in Zenobē is the first to be made through the organisation’s global climate strategy, which is part of KKR’s $54 billion global Infrastructure business and dedicated to investing in solutions at scale to help support the transition to a low-carbon economy.
What is the market offering of Zenobē?
Founded in 2017 and headquartered in London, Zenobē is a global player in electrification solutions for fleets and battery storage solutions for grid network infrastructure, with leading positions in the UK, Australia and New Zealand, and a growing presence in continental Europe. Zenobē is one of the leading fleet electrification platforms, helping bus and increasingly HGV operating companies to decarbonise their fleets and meet emission-reduction objectives.
Zenobē’s EV fleet business provides end-to-end solutions to transition conventional internal combustion engine vehicles to electric, including financing of chassis, batteries on the vehicles, and charging infrastructure in depots, complemented with an integrated software.
Through its network infrastructure business, Zenobē develops and builds groundbreaking large scale batteries that connect to transmission grids, providing essential grid services to complement the growth of intermittent low carbon energy generation and allowing economies to achieve their net zero ambitions, without compromising the grid stability.
Decarbonising transportation, reducing pollution in big cities and meeting national net-zero targets will require substantial investment and a rapid shift to electric vehicles. The transport sector is the largest source of carbon emissions globally, resulting in tightening regulations related to emissions by public transport. KKR plans to work with Zenobē to meet the growing demand for EV adoption from bus operators and other commercial fleet businesses globally.
What does the new funding mean for Zenobē?
Commenting on the funding, Nicholas Beatty, Co-founder and Director of Zenobē, said: “This investment acknowledges the significant role that transport decarbonisation and battery storage have to play in our net-zero future. It’s also a significant vote of confidence in our business, its achievements to date and future aims. Batteries are the under-recognised crucial component of our future energy and transport systems, and they’re available now.”
“KKR provides Zenobē with a leading international strategic partner to support our expansion plans, taking our experience in accelerating the electrification of fleets and maximising the uptake of renewables into North America, Europe, Australasia and other markets. It also provides support for our ability to raise further debt funding for these expansion plans.”
What does this mean for KKR?
Commenting on the funding, Alberto Signori, Partner in KKR’s European Infrastructure team, said: “This is a rare opportunity to support a clear leader in transport decarbonisation and battery storage, two sectors which are critical in driving the transition to a net-zero world.”
“As a significant contributor to decarbonisation of our economies, Zenobē is an exemplary first investment in KKR’s global climate strategy which seeks to scale up businesses at the forefront of delivering real-world solutions to reduce carbon emissions. Zenobē’s eccentric management team and Infracapital have built a unique and hard to replicate global platform, and we look forward to working alongside them to further scale the business internationally.”
Shreya Malik, Director in KKR’s European Infrastructure team, added: “We believe Zenobē will continue to benefit from strong secular tail winds including stricter emission regulation in urban and regional areas, and the greater use of low carbon generation in the energy mix driving a need for grid balancing solutions. We see significant growth opportunities within Zenobē’s existing customer base, as well as huge potential in new markets globally.”
“We are excited to bring our operational expertise within KKR’s platform to actively support the company in continuing to further build a market leading and climate critical business.”
What is the expertise of KKR in infrastructure investing?
With over 15 years of expertise in infrastructure investing, and a long history in the industrials space, KKR has extensive knowledge in renewable energy and climate-related investments.
Since 2010, KKR has committed over $40bn to sustainability-focused investments, including over $30bn to climate and environmental sustainability investments, accelerating net-zero solutions like X-Elio and Sol Systems, building out net-zero platforms in transportation with Q-Park and Ritchies, and driving transitions with investments like Albioma and ContourGlobal.
KKR has been investing in the UK for over two decades, having deployed almost $24 billion in equity across all investment platforms, including almost $5 billion in sustainability-related investments over the past 3 years in investments like Citation, ERM, John Laing and Viridor.
KKR also expects to help Zenobē expand its grid-scale battery storage capacity through the construction and expansion of new and existing sites. The investment will help Zenobē to build on its leadership positions in the United Kingdom, Australia and New Zealand, while continuing to grow across continental Europe, and also expand into North America.
What are Infracapital’s thoughts on Zenobē?
Commenting on the funding, Andy Matthews, Head of Greenfield at Infracapital, said: “Since our initial investment in 2020, Infracapital has supported Zenobē’s innovation and expansion as it has gone from strength to strength in both the battery storage and transportation sectors. We are delighted to announce our further investment into the business, and to embark on this exciting journey alongside KKR as joint shareholders in Zenobē.”
“This strategic partnership marks a significant milestone for the business and also fulfils our confidence in its ability to continue to play a leading role in sustainable solutions. We look forward to continuing to contribute our expertise and resources to support Zenobē’s further success on a global scale, whilst creating long-term value for our investors,” Matthews said.
