Investing to encourage innovation: Limburg in Belgium

Investing to encourage innovation: Limburg in Belgium

LRM is an investment company with a remit to promote innovation-based economic growth in the northeastern Belgian province of Limburg, on the border with the Netherlands. Among the core areas for LRM is “sustainable societies”: providing investment for low-cost sustainable production or the efficient management of essential primary products with a reduced impact on the environment. LRM Head of Sustainable Societies Roeland Engelen discussed LRM's work and highlighted some success stories.

What is the background of LRM and who are the main financial backers? To what extent is it a private sector initiative, and to what extent does the public sector get involved?

LRM is an evergreen investment fund, founded by the Government of Flanders, following the closure of the coal mines in Limburg at the end of the 1980s and beginning of the 1990s. LRM is a €250 million equity fund. In 2014, we were granted an additional €100 million loan by our shareholder. Although the Government of Flanders is our sole shareholder, LRM acts like a private company, with a focus (among others) on profitability and creation of employment in the region.

LRM is actively involved in the creation of an “incubation atmosphere” in the region, through construction of some real estate/incubator buildings. In this way, LRM supports young, start-up companies in their ambition to grow in the region.

In the green innovation sector, examples of incubator locations in Limburg are the GreenVille Centre of Cleantech[1] (circular economy) in the town of Houthalen-Helchteren, and IncubaThor/EnergyVille[2] (smart grids/renewable energy), a campus in Genk that includes research and development facilities and space for entrepreneurs. Currently, LRM has investments in a total of 188 companies, with a total of 11,235 full-time equivalent staff.

What criteria do you apply when looking at sustainable societies projects?

As mentioned, LRM is an investment company. Our primary goal is to be profitable. Next to that, creation of employment in the region is key. When assessing a project or company, we focus on technology and intellectual property, market drivers, unique selling points and, probably most important, the quality of management.

Your sustainable societies investments cover four sub-areas: green energy; smart industries and building; recycling and materials; and new generation agriculture. Is it easier to find projects in some of these areas than in others?

We recently changed the names of two of the four sub-areas. We focus now on green energy, smart cities, recycling and materials and AgTech (agricultural technology). Some years ago, most investment opportunities were found in green energy and smart cities. Nowadays however, we see a lot more opportunities in the other sub-areas, mainly in AgTech.

Limburg is a border region, close to the Netherlands and Germany. Are you able to attract projects/investment from these other EU countries?

As one of our focus areas is creation of employment in the region, we do focus on attracting projects/companies from outside our region to our region. In this respect, we look at companies from our neighbouring countries. Attracting them to our region is always a challenge, but we are able to convince them from time to time – for example Kriya Materials[3], a Dutch company that produces coatings for energy-saving windows. [Editor's note: Kriya Materials is also a partner in Co-pilot, a H2020 project[4], which is developing a “kitchen” in which “recipes” for nanomaterial composites can be tried out; nanocomposites could have various eco-innovative applications.]

What are some of the main lessons about sustainability you have learned from your sustainable societies investments?

The main lesson is that you really can be successful in investing in the area of sustainable societies. My belief is that there are great opportunities ahead of us, certainly in the AgTech and recycling and materials sub-areas – most probably involving re-use of carbon dioxide.

Are there one or two projects you would like to highlight?

First, Punch Powertrain[5]: LRM invested in 2009 in the company, an independent manufacturer of automatic fuel-efficient drivetrains for cars, with a focus on hybrid and electric vehicles. With its last customer ending his contract, the company was on the verge of bankruptcy. With a renewed geographical focus on China (research and development in Limburg and a production facility in China), Punch Powertrain managed to take a major market share in the Chinese automotive industry. Earlier in 2016, the company was sold for €1 billion to a Chinese investor, Yinyi Group.

Second, REstore[6]: LRM invested early in this ‘start-up’ company. Two entrepreneurs founded the company in 2010, focusing on ‘demand-response-aggregation,’ which is the balancing of energy demand and supply in the context of the expansion of renewable energy, and which helps large-scale energy users to optimise their energy consumption and reduce their energy costs. After success on the Belgian market, REstore is now heading into different EU markets. The company has grown in the last few years from eight full-time equivalent staff (at the point at which LRM invested in the company) to over full-time equivalent staff currently. The company is now recognised as a world-class technology platform in demand-response aggregation. [Editor's note: At a ceremony in New York in December 2015, REstore received a Platt's Global Energy Award in the energy management category].

Further information: http://www.lrm.be