Impact

What drives demand for the products in your sector?

Ara is focused exclusively on industrial decarbonization or, put another way, decarbonizing “the world of made things“.

When Charles Cherington and I founded the firm in 2017, decarbonization was not a term many people understood. Today, Net Zero is at the top of the agenda of most major corporates and now governments. The world is seeking solutions that replace the existing technology and processes for lower carbon or less waste emitting alternatives.

At Ara, we focus our investment lens on businesses that are making today’s products with 60%+ lower emissions and manufacturing cost at parity with (or better than) incumbent businesses, therefore we believe Ara investments have the potential to become highly desirable assets.

What does it take to make successful investments in your sector?

There are two things: One is sector expertise. The industrials space is highly fragmented and very technical. We pride ourselves on deep sector expertise to find the right operators for the right businesses with the right products across key sectors of the industrial economy including chemicals, materials, energy efficiency, green fuels, food and agriculture, manufacturing and industrial services.

The other is a builder skillset. To decarbonize you need to build things. Alongside our investment team, we’ve built a team of operators that have developed, designed, engineered, constructed, and project-managed for some of the largest companies in the world. They now work exclusively with Ara.

Across over $5bn of committed capital we have 46 industrial projects under Ara control/construction.

What keeps you up at night?

The ever narrowing window to achieve carbon emissions targets. If the world is to avoid going over 1.5C, global CO₂ emissions would have to reach net zero by 2034, as new reports suggest, not 2050. What worries me is that currently there’s not a lot of scientific literature that shows us we can achieve that. This really focuses our team. It is why we set up Ara, but it puts even more pressure on our investments to play a meaningful role in the decarbonization story.

What was your latest investment and how does it make our world more sustainable?

The latest investment is  Vacuumschmelze (“VAC”). Headquartered in Hanau, Germany, VAC is a leading global producer of advanced magnetic materials and the only rare earth permanent magnets producer of scale in the Western Hemisphere. This 100 year old company is uniquely positioned to supply mission-critical materials and components that feed various decarbonization-driven trends. VAC enables electrification and energy efficiency across the automotive, renewable energy, industrial automation, and aerospace industries through the designing and manufacturing of soft and hard magnetic materials. In fact, VAC is the sole Western manufacturer of sintered NdFeB electric vehicle-grade permanent magnets. Through permanent magnet sales for use in electric vehicles alone, VAC has the potential to catalyze the abatement of one gigaton of CO₂e in the next five years.

In addition, Ara’s Impact Team is coordinating with VAC management on various sustainability initiatives including a complete assessment of VAC’s Scope I, II and III emissions at all facilities, putting science-based targets in place to reduce emissions over time, and the implementation of policies and initiatives that promote diversity, equity and inclusion at the company’s German headquarters and then expansion to other facilities worldwide.