The ice is starting to thaw for private market fundraising after a frigid couple of years.
“While not in the numbers yet, we believe that the decline in 12-month fundraising figures began to turn in Q2 2023,” Hilary Wiek reports in PitchBook’s latest “Global Private Market Fundraising” roundup.
Fundraising for real assets stood out, reaching nearly $142 billion in the last four quarters, nearly quadruple the previous period. About 95% of the capital committed to real asset funds so far this year has gone to infrastructure funds.
Even underinvested sectors like water are seeing interest: WaterEquity this week snagged $100 million for its Water and Climate Resilience Fund for investments in water delivery, treatment and reuse projects in Africa, Asia and Latin America.
Climate confusion
The rebound in private fundraising was buoyed by billion-dollar infrastructure funds emphasizing decarbonization strategies, including $10 billion-plus clean energy infrastructure funds from Brookfield and Copenhagen Infrastructure Partners that are expected to close by year end.
Some of the marketed sustainability angles warrant close scrutiny. Five Point Energy this week raised $1.4 billion for a “sustainable infrastructure” fund that focuses on water management for oil and gas companies. The fund will also invest in data center and solar projects on 230,000 acres in the Permian Basin in the US Southwest.
Houston-based EnCap Energy in May raised $1.5 billion for its second Energy Transition fund to invest in carbon management projects and low-carbon power infrastructure and fuels, including renewable natural gas.
“We continue to believe all sources of energy are needed,” said EnCap’s Jason DeLorenzo.
Emerging managers
“Allocators are broadening their geographical horizons,” says PitchBook, but fundraising for emerging managers remains an uphill climb.
ImpactAlpha has learned that Latimpacto and IDB Lab are launching a Green Catalytic Fund to support Latin American businesses and communities in reducing carbon emissions and sustainably managing natural resources. The InterAmerican Development Bank, IDB Lab’s parent, as well as Coca-Cola and Bayer Foundation are among the fund’s first investors.
First Circle Capital, a women-led fintech VC firm in Africa, notched an additional $1 million for its first fund. Technical assistance and working capital would help new fund managers launch and deploy their first funds.
“We’re starting to see some dedicated capital for that,” said First Circle’s Selma Ribica, including for impact management and measurement.
