RI Interview: Ben Goldsmith on Menhaden Capital’s “tricky start”

Ben Goldsmith, the UK financier and environmentalist, admitting that his new listed environmental investment venture Menhaden Capital has had a “tricky start” due to a decline in the renewable energy market last year, says targets set as part of the Paris climate agreement will help the industry.

Last year, Goldsmith stepped back from WHEB Asset Management, the sustainability fund manager he co-founded in 2002, to float Menhaden, a new trust backing companies and assets focused on improving energy efficiency.

He founded Menhaden with Graham Thomas, the ex-chair of RIT Capital Partners plc’s Executive Committee, and Alexander Vavalidis (ex- Manzanita Capital).
Menhaden Capital is chaired by Sir Ian Cheshire, former chief executive of Kingfisher, owner of DIY retailer B&Q; and its board includes responsible investment stalwarts such as Emma Howard Boyd, acting chairman of the UK’s Environment Agency and former director of stewardship at Jupiter Asset Management; and ESG consultant Howard Pearce, former head of the £2.3bn Environment Agency pension fund.

At its launch last year, it raised £80m. But its performance has been shaky with its net asset value per share falling by 14.1% in the period from 31 July to the end of December. The MSCI World Total Return Index rose by 0.8% on sterling terms in the period.

Speaking to Responsible Investor, Goldsmith, who is the brother of Conservative MP Zac Goldsmith, said Menhaden had got some of its allocations wrong – the organisation’s annual report says the portfolio was hard hit by investments in Terraform Power, SunEdison and Abengoa.

“It’s had a tricky start. It launched at the top of the market and we were a little bit hasty investing capital. Markets declined. We got it wrong on SunEdison which compounded that. However, the performance was not disastrous, we are optimistic with the portfolio.”Listed solar company SunEdison filed for bankruptcy protection last month. It counts as one of the largest financial collapses in recent years for a company whose market value reportedly stood at nearly $10bn last summer.
Menhaden withdrew from SunEdison, at the time one of its top ten holdings, in late February, before it filed for Chapter 11 protection. However it remains in two so-called ‘yieldcos’ connected with SunEdison, TerraForm Power and TerraForm Global, that are not affected by the bankruptcy.

Going forward, Goldsmith said the targets set by the Paris agreement for renewable energy capacity would help the market.

Cheshire said: “Despite this disappointing start, your board believes in the company’s long-term investment strategy and the Menhaden team. The company was launched with the aim of applying a patient yet opportunistic approach to a series of global energy and resources-linked mega trends – the ‘green industrial shift’. Within this theme the portfolio managers are well placed, having unique access to ideas, world-class partners and opportunities.”

Menhaden’s shares are dual listed on the London Stock Exchange and the Social Stock Exchange segment of the ICAP Securities and Derivatives Exchange.

Speaking about its listing via the Social Stock Exchange, Goldsmith described the listing as a useful marketing tool for Menhaden that recently launched its first impact report since its IPO, a requirement of membership on the Social Stock Exchange.

The impact report provides case studies on its investments, details on its engagement activities and notes that an independent assessment of Menhaden’s public equity investments found its carbon footprint was less than a third of a comparable index based on a Russell-developed set of global small – and mid-cap companies.