Taking charge
Infinium Logistics claims it is creating a new sustainability-focused asset class, straddling infrastructure and real estate, with its ‘FleetHubs’, where logistics companies can park and recharge their electric fleets.
The company is responding to the challenge of decarbonising transport. In 2020, the global transport industry was responsible for around a fifth of all CO2 emissions and both nations and the logistics industry are committed to zero emissions by 2040.
Infinium is a relatively new venture, launched in 2019 by executive chairman James Lee and chief executive Paul McCormack: entrepreneurs with experience in the logistics and energy sectors. Last year, Phil Bayliss joined from Legal & General, where, as European chief executive, he had spent 14 years in real estate and private equity investing, .
Infinium is headquartered in the UK and has a presence in Germany, Spain, France, Italy, Poland, and North America. It is focused on supporting the electrification of logistics, particularly in the middle and last mile. Logistics companies such as Amazon and DHL are electrifying their fleet in advance of expected bans on sales of vehicles powered by fossil fuels. Amazon’s first electric van hit the road in 2020 and it has committed to buying hundreds of thousands more.
In the UK, six million fleet vehicles do the bulk of the miles covered by the nation’s vehicles. Most cars are unused 90% of the time, while delivery vans are on the go most of the day. The situation is similar in the other global markets being targeted.
Delivery van fleets need parking areas when they are unused at night and electric vehicles need this time for recharging as well. It means electric fleets are charging while the nation sleeps, using the cheapest electricity.
“FleetHubs offer a purpose-built parking and charging solutionfor electric van fleets. We are looking at sites which can house 100 to 800 vans and charge them with renewable grid energy, supported by PV panels and batteries. They will also have charging forecourts for the public,” says Bayliss.
“The future of transportation is zero emissions. We are repurposing existing real estate to enable zero carbon, technology-enabled, modern logistics facilities that allow e-commerce operators to reach customers faster in a cleaner and greener, more efficient way.”
In May, Infinium launched its first property fund, which raised £200 million ($245 million) in initial equity commitments, giving £500 million of firepower with gearing. The capital will be used to develop a network of FleetHubs across Europe.
The fund has already secured one site in Swindon, UK, and has six more under offer. It is targeting brownfield sites across Europe of over 1.5 acres and close to logistics hubs. Bayliss says sites will typically cost £5 million to £20 million, while development and infrastructure will add £5 million to £10 million in costs. A large part of this will be to upgrade the power supply and ensure access to renewable energy. FleetHubs will use a lot of electricity compared with many land uses, but far less than data centres, for example.
New real estate, technology and sustainability-focused private equity group GreenPoint Partners has invested in the fund, its first real estate investment, and in the Infinium platform.
Refining the model
The FleetHubs model is being refined on the go, as Infinium takes on new sites and customers. As well as new- build sites, it could refit existing car parking to serve logistics.
In the future, the concept may be adapted for heavy goods vehicles, but at present there is no real consensus about the ideal sustainable fuel for HGVs: it may be electric, compressed natural gas or hydrogen fuel cells. There is also potential to work with logistics developers to help them use their yard space and offer their customers a parking and charging solution.
Notwithstanding talk of a new asset class, Bayliss is confident the FleetHub model will be attractive to real estate investors. Certain aspects of the sector are operationally complex, such as securing of renewable power to the sites, however, similar complexities exist in the data centre market, in which real estate investors are keen to participate.
“The bones of it, though, is a lease,” says Bayliss. “So it isn’t too sophisticated for real estate investors. Once the concept is stabilised and there is more depth in the market, I believe it will be attractive.”
Initially at least, Infinium is the only company ploughing this particular furrow. Bayliss says: “Our investor base is global pension funds and sovereign wealth capital and they tell me there is no one else doing this globally. Actually, I get no comfort in being the trailblazer, what we want is a healthy market with sophisticated competition.”