BlackRock will offer private markets exposure to the global energy transition with the launch of an infrastructure fund. But the world’s largest asset manager has competition from established private equity names, and Amplify can reveal the latest, solar power-based, launch from Golding Capital Partners.

The fund

BlackRock’s private investment fund will move away from the traditional closed-ended structure. The asset management group has launched it as a perpetual fund – so investors can put money in on an ongoing basis.

The fund will invest in renewable energy infrastructure as well as data centres, battery storage systems and grid digitisation technologies.

What is BlackRock Alternative Investors?

BlackRock has invested more than $55bn (£46bn) of capital across its infrastructure strategies. The group’s first investment in renewable energy was a wind project in Europe in 2012. The firm’s real assets business has $75bn in assets. Across alternatives, it manages $330bn.

It has been pushing the energy transition theme in recent years, even as the group’s chief executive and public markets division have come under fire for greenwashing.

On the alternatives side, the firm established Decarbonization Partners with Singaporean sovereign wealth fund Temasek to focus on late-stage venture capital and early growth investments. It is also investing up to €230m (£195m) to develop battery storage in the UK.

Why is this fund important?

Energy transition has become very popular among private equity and infrastructure investors as a theme, with billions of dollars going into deals. This is particularly the case with renewable energy. In Europe, the number of deals involving renewable energy hit a peak in 2021, with 189 transactions completed, worth €12.8bn, according to PitchBook.

The key difference between BlackRock’s product and other private equity funds investing in energy.is its open-ended structure. BlackRock’s fund aims to provide liquidity to investors at regular intervals.

Many argue that private markets are really where the energy transition will be initiated. And there is a $5.7tn annual investment needed to move to a clean energy system, according to the International Renewable Energy Agency.

And for environmentally-minded investors, more funds mean more investment opportunities. However, there has also been a dramatic rise in funds claiming to address environmental problems or follow ESG criteria, raising concerns over the potential for greenwashing and mislabelling of products.

Still, an asset manager with the profile of BlackRock funnelling capital into businesses that will facilitate the energy transition is an important step in plugging the financing gap.

What are other groups doing?

Berlin-based private markets investment manager Golding Capital Partners has also set up an energy transition-focused fund, Citywire Amplify can reveal.

The strategy was registered in Luxembourg and is aiming to raise €300m from investors. It will invest two-thirds of the capital into renewable energy projects and the rest into other components of the energy transition, including carbon capture and storage.

The fund will invest into other funds through primary commitments and dedicate up to 20% of the strategy to co-investments. The fund will be classified as Article 8 (light green) plus under the SFDR and invest mainly in Europe and North America.

‘Over the past year we had a lot of conversations with our investor base about the energy transition and they expressed a desire to participate in the transition as investors,’ said Thilo Tecklenburg, managing director at Golding. ‘On the investment side, we saw the universe of renewables and other energy transition topics and activity increasing as well.’

In June, Natixis Investment Managers affiliate Mirova acquired renewable energy specialist SunFunder and said it is planning a solar energy debt financing fund with an investment capacity of $500m.

Last September, Future Energy Ventures, a venture capital firm funding startups that support the energy transition, launched its second dedicated fund seeking €250m.

Private capital will shape the energy transition. But just how much private capital should be left to its own devices and allowed to lead it is the important question.