You are here: Home » Companies » News
Business Standard

BlackRock raises $673 million for climate-focused infrastructure fund

BlackRock Inc said it has raised a target-beating $673 million for an infrastructure fund with backing from the French, German and Japanese governments

Topics
BlackRock | infrastructure | Infrastructure Fund

Reuters  |  GLASGOW/BOSTON 

Photo: Reuters
The world's largest money manager hopes the fund, announced on Tuesday and dubbed the Climate Finance Partnership, will show how to mobilize private capital in developing countries to tackle climate change (Photo: Reuters)

By Simon Jessop and Ross Kerber

GLASGOW/BOSTON (Reuters) - Inc told Reuters it has raised a target-beating $673 million for an fund with backing from the French, German and Japanese governments to invest in climate-focused projects such as renewable energy in emerging markets.

The world's largest money manager hopes the fund, announced on Tuesday and dubbed the Climate Finance Partnership, will show how to mobilize private capital in developing countries to tackle climate change, a sticking point at United Nations climate talks under way in Glasgow. Investors have been wary of investing in risky projects without more certainty they will get a return.

State-owned development banks from France, Germany and Japan and philanthropic institutions such as the Grantham Environmental Trust and the Quadrivium Foundation are providing 20% of the fund's capital and have agreed to take losses before other investors.

While a number of multibillion-dollar renewable energy funds have been raised over the last year to help build out solar, wind and other projects, the vast bulk has been spent in richer countries offering investors lower risk.

Emerging economies, including countries across Africa, Asia and Latin America, will need around $1 trillion a year out to 2050 to help them transition to a low-carbon economy, said. In 2020, just $150 billion was invested, excluding China.

and the fund's other backers are trying to muster more support for such emerging markets-focused initiatives at the COP26 United Nations Climate Change Conference in Glasgow. The new fund could help developed nations meet a target of mobilizing $100 billion a year to help poorer countries tackle climate change.

Among the fund's 22 backers were French energy company TotalEnergies and institutional investors including AXA and Dai-ichi Life Insurance. The fund comfortably beat its fundraising target of $500 million, BlackRock CEO Larry Fink said on Tuesday, speaking at the Green Horizon Summit, held alongside the COP26 climate talks in Scotland.

"We could have raised a lot more and this is a great example of leveraging what public capital can do," Fink said. He also backed the concept of energy spinning off a portion of their assets and said world leaders should rethink how institutions like the World Bank could be reformed to harness more private-sector lending.

"We're going to have to change finance," he said.

The fund has a typical 10-year lock-up with a five-year investment period, with the average equity investment likely to be in the $25 million-$75 million range, David Giordano, global head of renewable power at BlackRock Alternative Investors, told Reuters.

"One of the key things that we talked about with our partners back in 2018, when we started down this path, was really coming up with something that was simple but did provide that sense of de-risking the emerging markets," Giordano said.

Kenya, Morocco and Egypt were all attractive for investment, as were Peru and Vietnam, where the government was "really committed" to the energy transition, Giordano said.

Renewable energy in non-OECD countries is expected to represent 49% of global energy capacity by 2050, Edwin Conway, global head of BlackRock Alternative Investors, said.

"Now, that's huge ... I think we're talking about decades, with regard to the opportunities that are ahead," Conway said.

 

(Reporting by Simon Jessop in Glasgow and Ross Kerber in Boston; Editing by Matthew Lewis)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, November 02 2021. 21:33 IST
RECOMMENDED FOR YOU
.