Courtesy Rahul Advani

Courtesy Sara Graziano

Courtesy Chris Smith

Courtesy Rahul Advani

Courtesy Sara Graziano

Courtesy Chris Smith

When Rahul Advani (MBA 2004) began his investment career in 1997, focused on the energy sector, he thought a future of accessible and affordable clean energy was still a ways off. But as he watched innovations like battery storage and solar drive sharp increases in demand, that clean-energy future didn’t seem so far away any longer. “We are moving off fossil fuels at a clip faster than anybody, even industry experts, would have predicted,” says Advani. “We are watching the utility industry—finally, 20 years after deregulation—fall to more nimble competition with smaller and decarbonized assets.”

Sustainability, which had become a bit of a buzzword in investment circles, had long felt like the right thing to do from a moral perspective. Advani, who was then a partner with Energy Capital Partners, saw it as the perfect foundation on which to build a dedicated private equity firm. So in 2018, he founded SER Capital Partners, which focuses on sustainable investments, and brought in partners Sara Graziano (MBA 2011) and Chris Smith (MBA 2001)—who contributed complementary skills from the energy sector—to establish the firm’s leadership team.

Advani believes the company’s middle-market private equity investment strategy is better executed and better aligns the firm with its investors and executive teams—a luxury afforded by its independence from other firms evaluating the opportunity. SER focuses on being an opportunistic and early mover in investments tied to clean energy, industrial sustainability, and the environment.

“We believe we can do this well because we don’t have any conflicts,” says Graziano, SER partner and chair of the investment committee, whose previous experience included over a decade of private equity and executive management roles in the sector, with notable experience in battery storage. “When you have a legacy asset base and investments that you’re still trying to defend, it’s very hard to wholeheartedly embrace the implications of the shift to sustainability-driven demand,” she adds. “We’re not aware of any other firms that are doing what we’re doing on an independent and targeted basis.”

The bonus to delivering returns on investments? The potential to transform the electricity-delivery model and combat the climate crisis. “We fundamentally believe that we don’t have to make a trade-off between having good investment returns and doing something that is good for the environment and sustainable,” notes Graziano.

For Smith, SER partner and CFO, it’s about betting on the future and recognizing a shift in the industry. “We’re looking ahead and thinking very deeply about where the industry is going as a result of innovation, as opposed to looking in the past,” he says. One sector where the partners see great potential for growth: battery storage. “It’ the Holy Grail of renewables,” Graziano explains, “because when people talk about getting to 100 percent renewables, that’s not happening without the storage.”

SER’s first two major investments, representing approximately $66 million in equity capital, were companies in the battery space. In June 2020, the firm acquired Microgrid Networks, a power distributor, to fund large-scale battery storage and solar power in New York City as it works to reduce fossil-fuel pollution, upgrade aging infrastructure and systems, and move its electric grid to between 70 percent and 80 percent renewable energy. SER’s second key move came just three months later, with the acquisition of three companies associated with HGP, a Texas-based energy developer, and LG Chem, one of the largest battery manufacturers in the world.

Rahul Advani, Sara Graziano, and Chris Smith at SER Office Opening in Bay Area, February 2020

Graziano thinks of the burgeoning battery-storage opportunity this way: When Tesla announced its plans to produce an electric-vehicle battery that could run for a million miles on a single charge, she began to wonder what might happen to that battery once the car itself died. “A car will not last a million miles,” she observes. That battery will eventually come out, and when it does, there will be an opportunity to give it new life before recycling it or creating hazardous waste.”

As SER looks ahead, the company knows smart energy is a smart investment, yet its mission is bigger than just the bottom line; it’s a chance to make real and lasting environmental change. “Obviously, we think we can make money for our investors,” Graziano says, “but it’s also about really being able to change the electrical grid. This is the grid that I grew up with. Now, it can all be changed with energy storage and renewables. It’s a legacy that will last generations.”

Post a Comment