North Sea firms are behind when it comes to supporting the technology required to decarbonise the energy system – but a pipeline of small companies are on track to start delivering in the next year to 18 months creating a “centre of excellence” in Aberdeen.
So said Hugh Little, an investment veteran and the north-east regional chairman of Par Equity, which is on the verge of announcing its latest investment in an Aberdeen-based firm.
Par, based in Edinburgh, invests between £2 million to £6m in growing technology companies, including the likes of Verlume – an Aberdeen clean tech company.
The investors recently upped their stake in the growing Aberdeen company, which has developed a subsea battery energy storage and management system, as it raised a further £2.5m to support expansion.
Mr Little said Par was competing with other investors to back another young business in the city, which has developed software that acts as an “error detection system for complicated engines and machines”.
Directors of Par recently visited Aberdeen where Mr Little introduced them to businesses and support organisations, including Robert Gordon University, the Net Zero Technology Centre (NZTC), advisers Anderson Anderson and Brown (AAB) and fellow investors, Alba Equity.
Mr Little said the Par investors are focused on taking stakes in later-stage companies that are already or close to commercialising their technologies.
Failure to invest
And while there is a pipeline on companies in the north-east that will be ready for further investment in the next year to 18 months, Mr Little said it was a “failure” of the oil and gas sector to invest in clean or low carbon technologies earlier.
He said: “What we are finding is there is a lot of work going on in small companies to develop the technologies to get us to net zero but they are still at the innovation stage and not quite ready for Par.
“In the next year to 18 months a lot of these businesses will have developed their software or whatever it is they are doing to a point where the likes of Par can get involved.
“A lot of it is still at trial and testing stage.
It is a failure of industry to not see all this coming and get on with this earlier.”
“It is a failure of industry to not see all this coming and get on with this earlier.
“Some of it must be happening within these big companies for sure but a lot of it is happening with people who are doing start-ups and very early stage and who need financial backing from outside to keep going.”
He added the oil and as operators “now get it” but the awareness of the need to move to low carbon technology came later than it should have been as most firms were still focused on oil and gas for too long.
“Until very recently within in all the big companies, all the technology was related to oil and gas and how we can get more oil and gas out cleaner, quicker, cheaper etcetera,” said Mr Little.
“The focus over the last 18 months has changed towards net zero.
“We are perhaps 18 months, two years behind where we should be.”
Aberdeen still on track to be ‘centre of excellence’
Nevertheless he is confident the region will catch up – he added “there’s no question Aberdeen aught to be the centre of excellence in all of this”.
“We have the people and history and the skills and all the ability to trial and test and all the rest of it on our door step,” Mr Little said. “Aberdeen should absolutely be the centre of excellence.”
Mr Little recently visited his alma mater Robert Gordon’s College to see a lighthouse he bought as part of the Clan Cancer Light the North fundrasing campaign held last year.
He has donated the artwork by well-known Scottish artist Gail Stirling Robertson to the school, where he is also a governor. The lighthouse, which is painted to look like a bookshelf, is now in the school’s library.
“As soon as a saw it I wanted to buy it and donate it to the library,” said Mr Little, who recently finished a five year stint as chairman of the charity which led the lighthouse campaign. “The quality of the paining and art is just stunning,” he added.
Mr Little spent the most of his highly successful career at Aberdeen Asset Management (AAM) (now known as Abrdn) where he built a private equity business which was later sold to Maven Capital partners in 2008.
One of Maven’s co-founders, Jock Gardiner, was a colleague of Mr Little at AAM and was part of the team there that bought Maven out.
Mr Gardiner is now a founder director alongside former Bank of Scotland director John Duncan of the local angel investor network, Alba Equity which launched in 2020 and has made a number of investments in new or early stage companies across a range of sectors including some in the north-east.
Mr Little expects to continue working with Mr Gardiner and his team at Alba creating a “good fit” in terms of the funding jigsaw for growing technology firms.
“They are doing earlier stage than Par,” he said,
“It is a nice fit with Par because we can pick up the stuff they have done and take it on to the next stage.”
Good news for both business and AFC
As a former board member at Aberdeen Football Club, Mr Little also remains a huge supporter of the Dons.
He is also optimistic for the side’s fortunes and said he is a fan of the appointment of Jim Goodwin as manager of the side.
“He’s a tough guy – he’s a grafter, he’s a no nonsense kind of guy,
“I think some of the Aberdeen players have got themselves into a comfort zone and they need to get a kick up the back side – I think this is the guy to do it.
“I am very pleased with the appointment.”