The investment vehicle headed by Al Gore has closed a new $683m fund to invest in early-stage environmental companies and has mounted a robust defence of green investing.
The Climate Solutions Fund will be one of the biggest in the growing market for investment funds with an environmental slant.
The fund will be focused on equity investments in small companies in four sectors: renewable energy; energy efficiency technologies; energy from biofuels and biomass; and the carbon trading markets.
This is the second fund from Generation Investment Management, chaired by the former vice-president of the US and managed by David Blood, former head of Goldman Sachs Asset Management.
The first, the Global Equity Strategy Fund, has $2.2bn invested in large companies the company judges have “sustainable“ businesses, from an environmental, social and economic viewpoint. Mr Blood said he expected that fund to be worth $5bn within two years, based on commitments from interested investors.
Mr Blood said raising $683m for the new fund in the midst of “market disruption” showed the resilience of green investing. “The fact we were able to raise $683m was extraordinary, so our experience is that it has not really been a problem [raising funds despite what is] generally a difficult environment,” he told the Financial Times.
“A fear expressed by some is that the first thing to go in a downturn is the nice-to-have sort of investment. Some people put green investments in that category, but we think that is nonsense. This is not nice-to-have – it is fundamental finance…because the transition from a high-carbon to a low-carbon economy is a ginormous step that is going to happen quickly,” he said.
Both Mr Gore and Mr Blood had invested in the new fund to a “pretty sizeable” extent, Mr Blood said.
The average size of investment made by the new fund is likely to be about $30m, in small private or public companies. All of the investors in the new fund were drawn from the company’s existing pool of investors.
None were willing to be named but existing investors in the Global Equity Strategy Fund include the Swiss private bank Lombard Odier Darier Hentsch; the California State Teachers Retirement System; Sweden’s Mistra Foundation; and Australia’s Victoria Super Fund.
Last year, Generation formed a partnership with the Silicon Valley venture capitalists Kleiner Perkins Caufield & Byers to collaborate on possible investments.
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