YouSaid · the spoken record

William Orum

lines on the record: 73
first: 2023-03-13
most recent: 2023-03-13
sittings or episodes: 1
sources: podcast

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“Off and say, you know, everybody's working on something, it works on both ways. It works to not be terribly cynical with others, be a bit introspective, and then conversely, when you're in a challenging period to also understand that everybody's working on their own issues. And so I think it's comforting to just always be aware of that on both sides.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've had periods of challenging investment results and underperformance and these sorts of things. Interestingly, it's actually been the last two years because we had really extraordinary gains. We benefited quite a bit, as many did. But in 2020, we really saw the culmination of a lot of our work. And what's been interesting is how do you rebalance a portfolio from those gains to have it be well suited for the going forward environment? How do you continue to invest around innovation and trying to move the ball forward while also managing the overall defensiveness and risk profile of the portfolios? But fortunately for us, we've managed to work through that, but it's been a real challenge to balance those tensions.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“My dad, who obviously has had more important impact on me personally, but professionally, he was a municipal finance banker even early on. He had done a lot in affordable housing and raising money for critical infrastructure. So early on, I had a sense that you could do things in finance and have some sort of positive impact with it. So that was something that was really influential to me. And then I would have to say my partner, Yanya de Garaglu, I think Jan deserves a lot of the credit for really setting the vision of Capricorn and focusing on staying true to the mission is this phrase of if you work on important things, they're more resilient. So it's not obvious, but if you're working on things that matter, more often than not, you can find solutions in different ways.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“It would have to be incongruence. And again, just trying to stay on topic with the impact. I think the impact space, NESG, has done itself a disservice in how it prices its product. So you have these people that are trying to really have exceptional impact. And then they show up to talk to us and their feel load is egregious. And they don't quite understand the incongruence between those two things. When you have an investment firm where they have a feel or a structure that doesn't align with the strategy, it's really off-putting to me.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“I am very attracted to forms of specialty finance. I think it's really hard to compound capital at abnormally high rates of return for long periods of time. So things where you can earn a good, but maybe not exceptional rate of return, but you can keep that capital out and allow it to compound, I think is really powerful. It's great to watch a business that has a really well-functioning origination engine and they're able to find these niches. And I think it has a lot of applicability for climate.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Why be remiss since I'm talking to you to not mention men's league hockey? I spent a lot of time in hockey ranks with my kids, but this is something that I just do on Sundays, and it's a great way to be outside. It's a great group of people. So it's something I look forward to.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“May very well be the solution that was missing in the sense that if you start to force the level of competition that I think some of the U.S. policy envisions, you will likely see an acceleration across the global landscape, which is interesting. It's counterintuitive. It'll definitely cost more money, by the way. I'm not an economist, but we know that there's leakage when you don't have fully globalized economy, and that's the same for climate. Conversely, ambition and seeking out prosperity for each individual country might be a very strong stimulant to all of this activity.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Grow global economy reasonably well. So it can be done. Now we have to do even more. But if I think about the amount of focus on this in 2023 relative to 2013, it significantly more and the prospects for large-scale deployment and also the innovation is probably great. I think the emerging markets, specifically China and India, are obviously a challenge. This new framework of competition.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think there's broad acceptance of the science, maybe not as much in the US, but certainly on a global basis. And I think broad acceptance on the materiality of climate risk as it relates to global economies. And I think that's resulted in a real acceleration in terms of the level of focus and activity. And I do think, well, it's always controversial when you see these large asset management firms really starting to shift their focus, build large-scale products around these issues, that gives me a reasonable amount of optimism. I think in the venture landscape, it's very rare that you run into any venture capital firm these days that doesn't have some sort of focus on climate. I think that's usually a pretty strong indicator, as I said a few times. I think ultimately technology and innovation will be core to this. So those are all give me some level of optimism. I mean, I think in the last 10 years, I think global emissions have only increased a handful of percentage points. And we've still managed to.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Deferred to Jan and other technologists around nuclear, but we do have that exposure, and I think it's highly relevant around something that could be really transformative. I think carbon is much more near term actionable for us in terms of the scale of dollars that we're putting into it. And so there's the regulated carbon markets. And then I think what's been in focus in the last couple years is the voluntary carbon market and what role will the voluntary carbon market play in really addressing the residual emissions. So even as we decarbonize There's broad acknowledgement that we're not going to be able to decarbonize fully by 2050. And so you're going to have to look at sinks. The market that can absorb the most significant amount of capital today is nature-based afforestation, reforestation. And then also why don't we just start with just avoiding deforestation and creating the right mechanisms for those communities and actors to maintain those assets. And so I think carbon markets and ultimately putting a price on that car.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Renewable power deployment, projects getting started with the Inflation Reduction Act. I mean, a massive amount of capital is now flowing into the U.S. for manufacturing around some of these issues. So the flow of capital has been reasonably significant on the positive. And that's not intuitive. But if you think about where are there secular long-term growth trends that likely have some positive structural advantages, I mean, this would be one of the first areas that you would look.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting in the sense that if you just maybe brought in that question to what happened over the past year, of course, overall markets and valuations have adjusted in virtually every segment, not just in clean technology and climate. But a lot of what happened underneath that, particularly given the war in the Ukraine and what's happened in Europe, I think in particular, there's been a massive acceleration towards this idea of energy security and resilience of systems, as people have cited, and then affordability and not being exposed to some of the volatility of traditional energy. So I think underneath what seems to be a resurgence of oil and gas and traditional power generation has been really strong trends for renewables and climate. I think you see this most clearly in Europe, where that's just resulted in a massive acceleration. When you say flows, if you look at the underlying flows around”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“What else is very interesting? I think on the venture side and growth side, I think, again, moving more into industrial decarbonization and thinking about what are the solutions and technologies in these very hard to abate sectors that aren't going anywhere. And they're contributing a significant amount to the emissions. So I think you're seeing more and more excitement and innovation in those areas.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“This hasn't yet happened in the energy transition, but I think because of what occurred in the last couple years and the current environment that we're in, I think there's going to be very interesting opportunity around distressed investing in clean tech, where you have really good assets, but their capital structure or the way that they were financed makes it more difficult to get further financing. And so I think you're going to see people with those skillsets probably come into the market. And that could be a very good way to move from a growth and momentum-oriented market to one that may be more well capitalized for building out the infrastructure, the manufacturing. And those are skill sets that those type of investors bring to bear. Nature-based solutions, natural climate solutions. I mean, that is very likely. It has to be part of the solution, and I think it will very likely be a burgeoning area. So we're spending a lot of time on the picks and shovels of it. So looking at project finance, but also looking at all of the infrastructure associated with nature-based solutions.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“A perfectly reasonable way to invest thinking holistically about the externalities, thinking about the durability of the economic model such that it's not extractive in any way. I think that's very prudent. I think many investors well before ESG was a term if they've been around for 30 years. They likely incorporated some version of that. But that's very different from impact. Impact has real intentionality and you're really looking to solve a very specific problem with capital. I would say that even we've evolved from, I think, sustainable is encompasses everything we do, just in terms of how we think about being a long-term asset owner. But we're really focused on trying to have real impact with our capital.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“I read last week that something like a third of all assets are now ESG assets. I think the ESG industry and complex deserves to be criticized and one should have some cynicism about it. There's this wonderful chart showing ESG assets going up into the right and then global emissions going up into the right. And so, you do have to ask what is the purpose of? I think sustainable investing is.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Over the last couple years, there's been so much more focus and attention on ESG that alongside of that you have terms like greenwashing. What are some of the examples of things that you've seen over the last few years that you never would have seen before environmentally focused investing was a thing?”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is that much higher in a highly efficient market where you have really great people and they have all sorts of options? But one of the things that we learned as we've seen more and more people shift from quote unquote traditional investing to something with an impact is the context matters in the sense that it's hard to take someone that's run a big investment organization and put them into a smaller one. And that's just common sense. I've certainly made the mistake of occasionally not quite understanding different environments in which individuals succeed or not.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'll tell you in the seating activity, because we've learned a lot about that, it's primarily the people involved. So one, I think every investment firm, whether it's impact or not, needs to have a pretty clear true north and identity. And I think where we've had less success than we would have hoped is that things don't go exceedingly well early. People tend to gravitate back towards what's traditional and comfortable. It's always better just to press whatever advantage you think. So be as differentiated as you can. And I think where we've seen firms not make it is they've come back to a traditional model. Two, I think one of the more exciting things about this space, and David Blood a generation had mentioned this to me a long time ago, and it always stuck with me, it was the human capital element. If you create a firm that has a mission and has a big aspiration, the probabilities of you being able to attract really great people.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the honest answer is that we're not doing ourselves a service nor the portfolio if we're willing to accept consessions. There's a spectrum of capital that one can use from philanthropy to PRI to market rate to really seeking out the best rates of return. And we really try as much as we can to fall into that market rate and earning exceptional rates of return because we're doing something different. So I don't know if we ever explicitly acknowledge that trade-off of wow, this is so impactful that we're willing to accept a concession. I don't think that's bad, by the way. I think sometimes people speak of concessionary investing in the context of it. I think it has an extraordinary purpose. It's just that we were formed to do something slightly different.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are certain examples you said that are on one tail or the other? There's a venture in a solar company that's clearly moving in the direction you want. And then there's this big swath of companies in the middle. When you're assessing, it could be a manager, a specific opportunity, I'd love to hear an example of the tension between the objective of reducing emissions, other attributes that could be in the company or in your case a manager.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Below our cost of capital. It may be more appropriate for pension funds or other large pools. And that's our whole goal. We want to take the first risk and then hopefully prove that out. But where we do take risk is in development or community solar or in some of the areas where there's a bit more hair on the situation and you can earn much higher rates of return as you transition an asset that people thought had some purpose and in fact has a completely different utilization around the energy transition.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think markets are very efficient and reasonably forward looking. I think in general we're focused on the companies where maybe not the worst. I think there's a level at which we may not want to be exposed given our focus, but that are okay, but they have a really interesting pathway to being very strong. And I think there's an opportunity to be compensated well for that with a long time horizon. I think one of the challenges that with sustainability or climate, it's inherently long-term oriented. I think there's a lot of urgency to take action today, but those financial returns, it's not like a trading operation where you see it so quickly. So I think those things have to be acknowledged. Ultimately, I think markets price in those good actors and they're valued at a certain level. And so they may still compound it at nice rates, but probably the more interesting opportunities are otherwise. Even in the private side, where so much of renewable infrastructure is priced, it's like.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you're bringing in those two areas where clearly there's a mission to reduce carbon, and you also have this economic return, what have you found in comparing the quote-unquote good company, so low carbon emissions, to a worse company getting better”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“At a higher level, et cetera, et cetera. Now, there are other companies where, frankly, doing that exercise, you do wonder, are we actually being compensated for that carbon risk and that impact? And in those cases, we either have managers who are actually focused on engagement and it's part of the plan. the hard work of changing a business's operations. I think that's been proven over time to be something that investors can be compensated for. Or we have to make a different decision.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“About 70% of our emissions in our portfolio are attributable to about 20 companies. Sometimes the paralysis sets in of this is such a difficult problem. And how could we even go about thinking about it in a highly diversified portfolio? And so I think what we've always been reasonably good at is starting from a foundational place and just trying to work through it and not allowing the perfect to be the enemy of the good. And so we know that there's about 20 companies that one, they're emitting significant carbon today. And so are we being paid for that? We're definitely not divesting of all carbon. I think it's about understanding what the externalities are, understanding what the risk is. And are we being appropriately compensated for it? So a lot of that carbon in our portfolio comes from utility companies that are on a pathway to transitioning. And for Wright, those companies will be ultimately more valuable in the future because they'll be better positioned, the cash flows will be capital.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the public sphere, I think it's actually reasonably deep. I think scope three, which is the catch-all for the global economy, is complex with a lot of double counting, but scope one and two emissions, which is really the directly attributable emissions for most companies. There's been a lot of work put into that. And I think certainly in the US, it's reasonably deep in terms of the understanding. And then also depending on the company and their level of interest in this, various pathways to reduce that over the coming years. When we look at our overall portfolio, we have about a third of the carbon intensity of a similarly sized global equity portfolio. We've taken out what I would call the easy stuff, right, around really the heavy emitters, but we still have a plan to further decarbonize and engage and hopefully influence our managers who in turn influence the companies. So we're not stopping there, but we started a reasonably good place. What's interesting is that still...”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think in the public markets, it's not straightforward and it's not silver bullet either, but I think there's a broad recognition and understanding that climate risk is material to forward enterprise value. And so again, I think it's obviously the qualitative things around strategy, governance, acknowledgement of these risks. I think it's organizations that are engaged in pathway around how can they decarbonize their operations over a certain period of time. But I think it's fundamentally about looking at the energy transition risk, physical risk. and trying to connect that as deeply as one can to the fundamentals of the business around what is changing around demand, what is potentially changing around the volatility of inputs in their own operations. And I don't want to say it's simple because it's not, but I also don't think it's rocket science or totally disconnected from how high quality equity investor with a long time horizon would think about a business to start with. So I think it's just about going a bit deeper around the climate risk as that becomes.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“How does an energy transition impact their forward revenues, profit margins, what multiple would you put on a business that is on a strong pathway versus one that remains exposed? And I think those are going to be the opportunities that we will be focused on and I think are pretty critical again to a net zero pathway.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Big part of the missions, and I think there's no question that there's a bifurcation on different utilities and their plan to get to net zero and their plan for an energy transition. So I think those are strategies where we think there's actually quite a bit of both impact and return potential. And then there's the Googles of the world, which generally speaking, they have the financial resources and aspiration to be entirely powered by renewable energy, decarbonize their entire operations. And those are I don't want to say easy, but those climate leaders are well understood. The interesting aspect over the next 10 years is everything in between. And it's looking at those companies and their transition and energy transition pathways and what those could be. And I think really understanding the risk and opportunity embedded in that bulk of the global economy. So what are their physical risks? What is their cost of capital risk?”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think the number is something like 40% of global emissions are attributable to public companies, so it's material. I think the challenge historically has been it's difficult to isolate. It's very diffuse in terms of how those emissions actually are coming into the system. Look, there's clearly climate solutions. We've seen in the last 10 years more acceptance in the public markets and frankly more need to finance some of these solution providers, get them to scale, and ultimately manufacture and then deploy whatever product or solution they have. So those are reasonably easy, and we've been quite active in the last 15 years in either having owned those companies in the private side and then them going public or backing managers that are reasonably well equipped. Utilities, I think, is a significant part of global missions, clearly, but within the public markets in particular, it's probably one of the more interesting ways to express climate advocacy and engagement in that it's such a”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“In Palo Alto and Silicon Valley, and then finding different avenues to get that actually implemented in some of these emerging markets.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Climate problem is not just an environmental problem, it's a social challenge too, and the impact of climate change will be felt disproportionately by the most vulnerable and poorest countries. So I don't think it's fair to entirely relieve those countries of some obligation because they are ultimately going to absorb a significant amount of the cost. And development institutions are working on these issues around how do you create different pools and concessionary first loss, insurance vehicles. There's a lot going on, but the scale of the challenge is so great that as of now, we haven't made nearly as much progress as one would have hoped. Just come back to, there is no path around addressing climate change without the innovation and technology and breakthroughs, flywheel working hand in hand with deployment. So it is ultimately about a lot of what I think is happening.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“So take the example of Indonesia, one of many countries that Will look to grow and historically been a tremendous amount of dirty energy emitted in that process. How do you think about a country that's had less stable regimes than others needing to have infrastructure in place so that down the road, whatever it is that's fueling their growth can contribute to what we're trying to get to globally?”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the energy transition and enabling it, and then leveraging that technology advantage to then have that transferred into the benefit of the global economy. And I think as you go from globalization to regionalization, globalized energy complex to maybe one that's a bit more distributed, I think it's going to be a harder and harder just to hope that capital is flowing into some of these emerging markets. And you have to likely win on technology solutions and getting that cost down to a level at which it can then be implemented and deployed locally.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“We can talk about Indonesia and some of the other large markets which are also contributing significant emissions. But we've tried to figure out different ways, we and others and development institutions of how do you get more capital into those markets to deal with their power sector and the industrial decarbonization that has to happen. And it's a very difficult challenge. So I can't say that I have a great answer. But one of the things that's come out of the Inflation Reduction Act is a different pathway, which is I think the consensus prior to the last couple years was somehow there is going to be this massive coalition that came together and we're going to figure out some transfer of capital that would enable private sector to be crowded in. I think competition may ultimately be the solution in the sense that the Inflation Reduction Act was really about American manufacturing, jobs, energy security, and making America the leader.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“It is obviously the core of the issue, I think, for many that look at this challenge, which is if you look at global emissions, 40% plus is now coming from China, India, and that will only grow over time. And they are on a growth trajectory, which will necessitate further emissions absence of massive change.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we like the evergreen structures quite a bit. Look, there's a whole industry in real estate around open-ended vehicles and interval funds. That's a massive asset management industry. And we don't see a reason why similar structures couldn't be created into renewables.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dealing with the asset management industry overall, the typical feel load applied to that activity is a real deterrent to crowding in large pools of capital. They aren't assets that have the optionality that can really absorb a 2 and 20 or a 1 and 20 feel. So a lot of the innovation that we've been working on has been around how do you create different vehicles to absorb this capital, whether it be evergreen or blended finance models. How can you create structures that can get to the scale of the $20 billion that's needed to start to build some of the very large infrastructure that's required?”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Likely 10 or 20 years. That's an enormous amount of impact on a reasonably small dollar investment in our case. And of course, we weren't the only ones involved, but we were involved very early. On the other end of the spectrum, there is things that are happening around renewable infrastructure in particular, where it's really just about getting the cost of capital down to a level at which it can crowd in much larger pools of capital than ours. And so, as I mentioned, in the mid-2000s, we could do renewable infrastructure and earn rates of return that were very attractive for our capital 10, 12, 15 percent. And then if you were able to aggregate a portfolio and sell it, you could do even better. And I think some of our partners were able to do that. That's really difficult today because of the competition in the marketplace. And what is the real risk? One of our big areas of focus is”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting you think about scale going back to venture, there can be very small investments that have extraordinary scale associated with them. And let's take Tesla as one example. So obviously for us, that was an early stage venture investment. The ultimate financial value became evident, the value of it as it relates to decarbonizing transportation is also significant. But the actual dollars deployed in our case were reasonably small and ultimately grow over time. And then on top of that, there is what Tesla did in the OEM industry overall, which is it.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“How do you think about scale? You're talking about climate solutions, which is clearly a global problem, what happens in China and India affects what we might be able to do here. There is this notion of you have a lot of capital dedicated to it. You're one of back managers that have some scale Where do you come at the pressure point where you think we can make the biggest difference?”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Same level of data or information in terms of how they operate with sequential and linear information. But you do have a mosaic around all of the different things that they've done over time. You have the ability to develop relationships with them in a way that's, I think, fundamentally different and superior to that which you could develop with an established firm. And so we leverage all of that. And we also try to make our involvement to the extent we can about more than the capital and everyone would like that to be the case. But we are a mission-driven organization. We do want to see these firms grow in scale and ultimately amplify their impact. So we provide a lot of services to them around marketing, operations, impact. And when you interact with someone as a partner, as opposed to maybe just a customer, you start to see a bit more about their own belief systems, values, and so all of that, I think, informs a level of diligence.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Impact in climate investing has evolved over time. Yorubin Munger, for example, had a long career at Baupost. He was not a new investor by any means, but we were trying to create something new, and he was applying a skill set that he had developed at Bowpost and then subsequently with his own capital to this emerging area. So you're not starting from scratch in terms of the mental models that they use to underwrite assets. Very rarely are we dealing with a true emerging manager, if you will. More often than not, I think what's really exciting about what's happening in the world today is you have people with really strong technical skills and investment experience, and they're making a decision to apply those skills to climate investing. And so there's a lot to work with, I would say, in terms of the diligence. Of course, with any emerging firm, whether that's impact oriented or not, you're not going to have this.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“How is the diligence in one of these newer managers different not just because they're an early stage manager, but because you have this particular axe for this space and there may not be as many players?”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“That you've had on your show. So Vision Ridge is one. And that's a good example of part of what we've tried to create over time. So we had started to invest into a fair amount of renewable power generation, water, agriculture, sustainably managed. And the scale of that activity got so much larger than our balance sheet could manage. And frankly, the specialization as more and more high quality investment firms came into the space necessitated that we put more of a dedicated focus on it. And so what we did was we actually contributed our assets. And then the team at Capricorn that had been managing those assets left and they partnered with Reuben Munger at Vision Ridge. And to their collective credit, they've built just an incredibly high quality investment organization. That's certainly been one really positive.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Challenges along the way, but overall that's a reasonably good place to start. So I think we've started in a rich area for returns in alpha generation. And so we've backed 25 firms over the last 15 years, a couple per year. Some have had incredible commercial success and grown to become very large organizations. Some haven't. But overall, it's been a positive experience for us as a firm, as I said, no question, it's been accretive overall.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Overall, it's been both fulfilling for the team in terms of the experience of creating new ventures. It's taking a venture capital model to the asset management industry, which I think is very fun and exciting from a return standpoint. We look at our returns as many do in all sorts of different ways. And there's no question that it's been highly accretive to the overall results. And I think part of that is going back to the start is Leaving aside the impact or the focus on climate, in our opinion, it's a reasonably good starting point to focus in areas where others aren't. Or there's some perceived reason that one can't make money there. You go to undercapitalized segments of the economy where maybe there are barriers to entry or have you, and you back a very highly capable team. And I think more often than not, good things will happen. You may have to have a different time horizon than a short-term trading operation. And there may be”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Invest in a sustainable and impactful manner. You know, I think it does. It's certainly been accretive to our returns, and I think we've met our clients' objectives around aligning the capital. But in the scheme of things, the truth is it doesn't matter because the scale of capital required is so great that unless you're being influential in either influencing or enabling other asset owners to invest in that way, then you're probably not fulfilling the mission to the degree that I think we wanted to. So it's always been about how can we not just invest our capital in this manner, but also be a positive contributor to the overall shift.”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source
“Cover the breadth of the global landscape and to go as deep as you likely need to go in some of these areas required a lot of specialization. So I think we had a decision to make, which is do we grow Capricorn into this massive investment organization or do we try to keep decision making within a small group of people and leverage the power of external partnerships? And so we took a hybrid approach which is that we got very active in incubating or seeding or partnering with early stage asset managers so we could get the benefit of some of that proximity to the underlying assets and the work, but where we could also benefit from the fact that there's just a lot more breadth and capability when you use external partnerships. And further, as we evolved over time, there's this question of does it matter if Capricorn”
2023-03-13 · Capital Allocators · William Orum – Mission-Aligned Allocation at Capricorn (Climate Solutions EP.2, Capital Allocators EP.301) · IDENTIFIED FROM THE TRANSCRIPT · source