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EXCLUSIVE BlackRock raises $ 673 million for climate-focused infrastructure fund


People are seen outside an exhibition hall that hosts BlackRock in Davos, Switzerland on January 22, 2020. REUTERS / Arnd Wiegmann

  • Climate Finance Partnership exceeds $ 500 million target
  • France, Germany and Japan all invest in new fund
  • Investment in emerging markets, a key issue in COP26 climate discussions

GLASGOW / BOSTON, Nov. 2 (Reuters) – BlackRock Inc (BLK.N) told Reuters it has raised $ 673 million for an infrastructure fund with backing from the French, German and Japanese governments to invest in projects focused on climate such as as renewable energy in emerging markets.

The world’s largest fund manager hopes the fund, which will be 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 in the nations negotiations. Climate Change Conference underway in Glasgow. read more Investors have been hesitant to invest in risky projects with no more certainty that they will get a return.

French, German and Japanese public development banks and philanthropic institutions such as the Grantham Environmental Trust and the Quadrivium Foundation provide 20% of the fund’s capital and have agreed to take the losses before other investors.

While a number of multibillion-dollar renewable energy funds have been raised over the past year to help develop solar, wind and other projects, most of it has been spent in richer countries. offering investors lower risk.

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

BlackRock and the other funders of the fund are trying to mobilize more support for such initiatives focused on emerging markets at the UN Climate Change Conference COP26 in Glasgow. The new fund could help developed countries meet their goal of raising $ 100 billion a year to help poorer countries tackle climate change. Read more

Among the 22 backers of the fund were the French energy company TotalEnergies (TTEF.PA) and institutional investors including AXA (AXAF.PA) and Dai-ichi Life Insurance. The fund has far exceeded its fundraising goal of $ 500 million, BlackRock said.

“This partnership is proof that governments, philanthropic organizations and institutional investors can come together to raise capital at scale in emerging markets, which are most exposed to the impact of climate change,” said the BlackRock chief executive officer Larry Fink in a statement. Fink has already called for linking public and private funding to fight climate change.

The fund has a typical shelf life of 10 years with an investment period of five years, with an average equity investment likely to be between $ 25 million and $ 75 million, said David Giordano, global head of renewable energy. at BlackRock Alternative Investors. Reuters.

“One of the key things we talked about with our partners in 2018, when we started down this path, was really to come up with something that was simple but gave that feeling of reducing emerging market risks,” said Giordano. .

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 account for 49% of global energy capacity by 2050, said Edwin Conway, global director of BlackRock Alternative Investors.

“Now that’s huge… I think we’re talking decades, in terms of the opportunities ahead,” Conway said.

(This story corrected paragraph 6 to show that the numbers refer to the economies of Africa, Asia and Latin America and exclude China)

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

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