A consortium of global asset managers will partner with newly formed Lunate Capital, based in the United Arab Emirates, on a $30 billion climate fund, they announced Friday at the ongoing COP28 summit in Dubai.
Alterra, managed by Lunate and funded by the UAE, will allocate $30 billion to climate investments. The fund will be split into two components: Alterra Acceleration, which will provide $25 billion to institutional capital; and Alterra Transformation, which will allocate $5 billion in risk mitigation to incentivize investments in the “Global South” and emerging markets.
Headquartered in Abu Dhabi, Lunate Capital manages more than $50 billion in assets. The Abu Dhabi royal family-owned investment manager is a part of Chimera Investment LLC.
COP28 is the 28th United Nations Climate Change Conference. It runs through December 12.
UAE officials aim for Alterra to invest more than $250 billion in climate solutions by the end of the decade. The fund will allocate capital to a number of managers, including Brookfield Asset Management, Texas Pacific Group and BlackRock, according to the announcement.
Brookfield Asset Management
Brookfield Asset Management announced a multi-billion-dollar Catalytic Transition Fund that will receive a $1 billion commitment from Alterra, which will also commit $2 billion to Brookfield Global Transition Fund II.
“ALTÉRRA’s goal is to mobilize $250 billion in capital by 2030 and stimulate a new climate economy in emerging and developing markets that achieve both climate and commercial outcomes,” said Majid Al Suwaidi, who will serve as Alterra’s CEO after operating as the director general of COP28, in a statement. “The partnership with Brookfield is a powerful demonstration of the UAE’s commitment to meaningful climate action and represents our wider ambition to fundamentally strengthen global climate finance.”
Brookfield is already pursuing opportunities, including a project to develop 6.0 GW of clean energy capacity in India that has construction of 1,200 MW of wind and solar projects set to be completed by 2025.
Texas Pacific Group
TPG will also receive funds from Alterra, which will commit about $1 billion to TPG’s Rise Climate II fund and $500 million to the firm’s new Global South Initiative, TPG announced in a press release.
TPG’s Global South Initiative intends to make private equity investments in “high growth climate opportunities” in the “Global South” and emerging markets. The “Global South” represents countries from around the world with lower GDP, rather than any geographic considerations, although many of the countries included—in Africa, Latin America and South Asia—are located south of more developed economies like the U.S., countries in Europe and Japan.
TPG’s Rise Climate II fund will pursue private equity investments across multiple climate transition strategies, including energy transition, sustainable fuels, sustainable products and materials, and carbon solutions.
“The combination of the UAE’s substantial commitments and TPG Rise Climate’s extensive experience scaling climate solutions globally has the potential to drive much-needed capital and expertise to the decarbonization challenge,” said Jim Coulter, TPG’s founding partner and executive chairman, in a release. “The size and innovative structure of this new initiative will allow us to support a broader opportunity set of ready-to-scale climate companies and projects in the Global South. Working together, we can bring capital at scale to accelerate the transition to a low-carbon economy in the Global South and around the world.”
BlackRock
BlackRock will receive up to $2 billion from Alterra for two separate funds: $1 billion to BlackRock’s climate transition-oriented private debt strategy and $1 billion for investment or co-investment in BlackRock’s infrastructure equity business.
Of the latter, $650 million will be allocated to BlackRock Global Infrastructure Fund IV, which invests in climate transition-related infrastructure projects. Another $350 million will be invested in BlackRock’s Climate Finance Partnership, which invests in climate-related infrastructure in emerging markets.
“The launch of ALTÉRRA will itself not only help mobilize much needed capital to support the transition in the Global South, it can also serve as a blueprint for other sovereigns and private sector actors to replicate, partnering to help unleash the trillions of dollars needed in developed and emerging markets,” said Larry Fink, Blackrock’s chairman and CEO, in a release.
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Tags: Alterra, BlackRock, Brookfield Asset Management, COP28, Jim Coulter, Larry Fink, Lunate Capital, Majid Al Suwaidi, Texas Pacific Group, United Arab Emirates