Nexus PMG has completed a $50 million growth equity round to expand its advisory services and “waste-to-value” project development business, the firm announced Tuesday. The round was backed by an affiliate of Greenbacker Capital Management, Ontario Power Generation Pension Fund and Liberty Mutual Insurance.
The funding will enable Nexus to expand much more rapidly than it has previously, as this is the first time the firm has expanded through institutional capital rather than its own operating cash flow, CEO Ben Hubbard said.
Nexus has already begun hiring business development executives with the infusion, Hubbard said. The money will also go to expanding Pathway Energy, Nexus’ carbon capture and storage development business, and Nexus W2V, the firm’s waste-to-value business that’s looking to double down on renewable natural gas and biochar.
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Nexus’ portfolio includes a mix of business lines in the waste industry. It started as an advisory firm in Texas in 2013, but Hubard said the business quickly expanded to include front-end engineering, technical design services for developers and operation of assets like the former Veolia biomass-fired power plant in Fort St. James, British Columbia. Nexus acquired a partial stake in the plant as part of its distressed asset investment business in 2021.
Hubbard said the advisory business still returns the highest margins for Nexus. He’d like to see it grow its client base — currently more than 80 infrastructure funds and private equity firms — to serve Fortune 500 companies thanks in part to the new funding.
“We now believe the time is right for us to really start representing more of them in their endeavors to decarbonize,” Hubbard said. “This capital that’s coming in is going to allow us to hire and scale to grow into helping a lot of those organizations.”
Nexus’ development work, which Hubbard describes as frequently a “gun for hire” arrangement with waste project developers, has been focused on thermochemcal conversion of various waste streams. The firm works predominantly with biomass, but it has also worked on projects that develop sustainable aviation fuel, biodiesel and other advanced waste-derived oils. Its portfolio also includes multiple landfill and anaerobic digestion projects.
Growing Nexus W2V and Pathway Energy via investment allows the firm to expand that work at a time when Hubbard believes interest from investors is rising in the waste sector, especially as low-carbon solutions become more attractive. He said Nexus has also been monitoring policy drivers like the update to the Renewable Fuel Standards, which he said was mostly positive for the firm’s internal development projects.
“We’re fairly diverse in the asset classes. But that’s the beauty of being around these for 10 years, even though that’s not an outrageous amount of time for any business. In these asset classes, that’s about as long as most of them have been mature,” Hubbard said.
Looking ahead, Hubbard see continued opportunity in the organic waste business. In addition to developing RNG projects, he’s also interested in getting in on the biochar market. Nexus has been researching the product, derived from plant waste and used as both a soil nutrient and a carbon sequestration technology, for several years.
Hubbard believes there’s a ready market for biochar, but the lack of consistent projects in the U.S. market mean there’s an inherent risk in developing the technology.
“There’s a lot of demand for the product, but there’s not a lot of people who are going to put a pen to a piece of paper to say, ‘I’ll buy it for next five years at this price.’ It’s still a build it and they will come model,” Hubbard said.
Hubbard anticipates that his company will have “a couple” biochar plants online over the next 12 months with a product that can target the higher end of the sequestration market in agriculture, meaning biochar that sells for roughly $750 per ton.
Bringing that business online wuld be a new foray into the carbon sequestration world, an area in which Hubbard sees increasing opportunity, especially for hard-to-decarbonize sectors like cement. He believes Nexus can position itself to play a key role in that area moving forward.
“We have a very unique business in that we’re the investor, the developer, and the services business all under one roof,” Hubbard said. “I think that’s what made this a really interesting and attractive investment to those who invested in us.”