Blackstone raises record $7 bn to finance clean energy push: Report

By Dawn Lim

Blackstone Inc. raised $7.1 billion for a fund to finance solar companies, electric car parts makers and technology to cut carbon emissions. 
 

The Blackstone Green Private Credit Fund III surpassed its $6 billion goal. This marks the firm’s biggest stockpile for a bet that the economy will rely less on oil and gas — and that companies behind the shift to lower-carbon sources will need financing.

Blackstone’s clean-energy arsenal also broadcasts its ambitions to build up its lending business as banks retreat under new regulations. 

While the firm under Chief Executive Officer Steve Schwarzman is best known for buyouts, it’s evolved into a major source of financing. Nearly a third of its $1 trillion of assets are dedicated to credit.  

President and CEO-heir apparent Jon Gray has asked dealmakers to mobilize around big themes and fast-growing parts of the economy to keep that money machine going. The fund is Blackstone’s first lending pool with the formal mandate to profit from a shift to alternative energy sources.

Key Blackstone funds swore off backing oil and gas exploration and production in 2022, capping off a yearslong retreat after returns for some energy bets see-sawed. 

Blackstone has readied a target to invest $100 billion on a wide-ranging category of companies poised to grow with the rise of alternative energy sources.

The world’s largest alternative asset manager is taking the opposite view from rivals and hedge funds wagering that they can keep making money from oil in the long term. Blackstone’s growing presence in green energy threatens to put it in the crosshairs of ESG critics that accuse money managers of advancing “woke” capitalism.  

“The capital needs for the energy transition are immense,” said Robert Horn, who oversees the credit arm focused on renewable companies and related plays. “This is an opportunity to use our capital and resources to try to transform big areas of the economy and make attractive returns for our investors.”  

The Blackstone veteran personifies that transformation. Horn, 41, was formerly the co-head of the firm’s energy lending arm, which Blackstone rebranded last year as a “sustainable resources platform” to reflect that focus. 

He said the platform has the capacity to pair Blackstone’s borrowers with other portfolio companies, which include everything from operators of power-hungry data centers to urban warehouses.

In recent years, the firm provided Altus Power with investment-grade debt and preferred equity and connected the solar power company to a Blackstone-backed warehouse operator. The pair kickstarted solar projects across New Jersey.

US policies will work in Blackstone’s favor as it doles out $7.1 billion for a new round of lending. The Inflation Reduction Act that President Joe Biden signed last year will provide incentives for electric carmakers and other renewable energy companies over the next decade. 

The programs provide “10 years of certainty,” Horn said. “The underlying favorable economics are allowing the sectors to win.”