The United Arab Emirates’ $30 billion Altérra climate fund, launched at last year’s COP28, included $5 billion in catalytic capital to incentivize institutional investment into climate opportunities in underserved markets.
The $5 billion Transformation Fund moved quickly, investing $500 million as “return enhancement” for TPG Rise Climate’s Global South Initiative. In June, Altérra’s catalytic arm put $1 billion into Brookfield’s Catalytic Transition Fund, a strategy earmarked for clean energy and transition assets in emerging economies.
To sweeten the pot for private investors, the Altérra fund includes a cap that limits its returns.
This week, both TPG and Brookfield announced they have attracted billions from institutional investors from across Asia and North America. “Our catalytic capital is proving instrumental in incentivizing investment to underserved markets,” Altérra’s Majid Al Suwaidi said in a statement.
Institutional capital
TPG raised an additional $750 million for GSI, bringing total commitments to $1.25 billion for high-growth climate investments in Africa, south and southeast Asia and Latin America. TPG Rise Climate II, backed by the commercial arm of Altérra, committed capital to the strategy. “We are encouraged by the initial pace of activity and client engagement around a first-of-its-kind strategy for our industry,” said TPG’s Jim Coulter. The private equity firm expects additional commitments in the next six months.
Separately, Brookfield raised a fresh $1.4 billion for its Catalytic Transition Fund, including from Canadian pension fund CDPQ, Singapore sovereign wealth fund GIC, Prudential and Temasek. Brookfield will deploy the capital in clean energy projects in South and Central America, south and Southeast Asia, the Middle East, and Eastern Europe.
Blending billions
The billion-dollar strategies from TPG and Brookfield are among a spate of recent funds leveraging first-loss reserves, guarantees and other catalytic mechanisms to attract institutional capital to higher-risk climate opportunities in emerging markets (for background see, “Blending billions: Lessons in catalyzing capital at scale for climate and development” and “How commercial investors are streamlining blended fund structures”).
