Toronto-based private equity and alternative investment firm Brookfield Asset Management recently announced it raised $15 billion for a new impact fund. The fund will be the largest of its kind, exceeding the asset manager’s prior expectation of $12.5 billion.
The Brookfield Global Transition Fund will be making large capital investments to help utilities, industrial and other businesses transition to a net-zero economy. This includes a large array of business initiatives, such as renewable energy, decarbonization, accelerating capital flows in line with the Paris Agreement, along with providing strong risk-adjusted returns to investors.
Brookfield initially raised $7 billion in July with significant investment from founding partners Ontario Teachers’ Pension Plan Board and Singapore’s investment firm Temasek Holdings. Other major investors include Public Sector Pension Investments and Investment Management Corporation of Ontario.
The initial hard cap on the fund was $12.5 billion, but due to overwhelming interest from its institutional investors, Brookfield now expects the funding to reach at least $15 billion.
“Brookfield is committed to achieving net-zero by 2050 or sooner, and to accelerating the global net-zero transition,” said Mark Carney, Brookfield vice chair and head of transition investing. “As the world increasingly focuses on sustainability, the required capital and investable opportunities are expanding faster than originally expected, creating an even greater opportunity for large-scale investments that address climate change and generate attractive returns.
Through this fund, we are pleased to partner with best-in-class institutions to commit the capital required to scale clean energy and catalyze companies onto Paris-aligned net-zero pathways.”
Carney, who previously served as governor of the Bank of England and banker at Goldman Sachs, joined Brookfield last August to help it launch its environmental, social and governance (ESG) investment business. He’s also the United Nation’s Special Envoy on Climate Action and Finance, serving as a leading voice on how private finance can be mobilized to help achieve net-zero decarbonization across the world.
“Private finance is judging which companies are part of the solution, but private finance, too, is increasingly being judged,” he said in an interview with the United Nations. “Banks, pension funds and asset managers have to show where they are in the transition to net zero. And people are voting with their money. That is creating the type of investment that we’re going to need to get to net zero.”
Brookfield, which has roughly $650 billion of assets under management, is the latest private equity firm to raise funds for an ESG fund. Other major private equity firms such as Bain Capital, KKR & Co. and TPG Capital launched similar funds, while Apollo Global Management is also seeking funding, according to Bloomberg.
Brookfield has committed to investing aligned with net-zero emissions by 2050 or sooner. Over the past 25 years, the manager already has built one of the largest private clean energy businesses in the world, which involves about $60 billion in assets under management, an installed capacity of 21,000 megawatts and a 27,000 megawatt pipeline.
“With installed renewable generating capacity of 20 gigawatts, we now produce more than enough green energy to power London, U.K. and we will more than double that amount once our development portfolio is brought online,” said the company in its net-zero commitment. “We recognize that further renewable power capacity must be rapidly scaled to replace fossil fuel generation and meet expanding global electricity demand so that the world can eliminate the more than 70% of global emissions that come from final energy consumption as quickly as possible” Carney commented.