New Funds & Fundraising Roundup: Institutional Investors & Corporates Bolster Sustainable Investing in Q4

BlackRock’s Billion-Dollar Fund Leads a Busy Q4 for Cleantech Fundraising

Private equity and other funding for cleantech and sustainability-focused companies flowed strongly in the final months of the year, with BlackRock leading the charge as it hit a $1 billion first close for its latest renewable power fund. Other notable recent fund activity include oil giant Petronas backing a $250 million cleantech fund run by a former GE Ventures managing director, a new fund from the former head of sustainability at Walmart, and Spring Lane Capital closing its first fund.

Startups are getting funding too. Recipients include a lab-grown meat startup, a platform that provides financing to small farmers, and California-based alternative dairy company Perfect Day.

This news round-up also takes a look at some of the activity at the recently finished COP25 in Madrid, an uptick in sustainability-linked loans across Asia, Nomura’s push into the US sustainability financing space, and more.

BlackRock raises $1B for clean power fund: BlackRock says it has hit a $1 billion first close for its new Global Renewable Power III fund, with commitments from more than 35 institutional investors across North America, Europe and Asia. The billion-dollar ticket indicates “strong investor demand for renewable power assets that can potentially generate attractive risk adjusted returns with low correlation to the economic cycle, and that align with their long-term sustainability goals,” BlackRock says in a statement.

BlackRock manages one of the world’s largest global renewable power platforms, with $5.5 billion in equity assets under management. Its Global Renewable Power platform has invested in more than 250 solar and wind projects worldwide since 2011.

BlackRock’s first Global Renewable Power fund raised $611 million, while its second raised $1.65 billion. The firm intends to raise a total of $2.5 billion for this third fund.

Petronas backs new $250M fund from ex-GE Ventures MD: Former GE Ventures managing director Ricardo Angel is now at the helm of a new venture capital firm, Piva. San Francisco-based Piva’s first fund is a $250 million vehicle that will invest in 15 to 20 tech companies around the world, in areas including electrification and other future-of-energy areas, as well as artificial intelligence, robotics and digital mobility. The San Francisco-based firm will invest in early to growth stage companies around the world.

Piva’s sole LP is Malaysia’s  Petronas, and the venture complements  another new VC effort from the energy giant. In October the company announced the formation of Petronas Corporate Venture Capital, a $350 million fund that will invest in startups in advanced materials, specialty chemicals and future-of-energy companies globally .

Ex-Walmart sustainability chief launches new fund: Singapore-based Circulate Capital has announced its first fund, the $106 million Ocean Fund, which will invest in companies that help prevent more plastic from being dumped into the world’s oceans. The fund is said to be one of the 10 largest Southeast Asia-based venture capital funds in the market.

The CEO of Circulate Capital is Rob Kaplan, the former director of sustainability at Walmart. The company’s first investor is PepsiCo; others include Procter & Gamble, Dow, Danone, Unilever and Coca-Cola.

The fund will offer both debt and equity financing to startups across Southeast Asia that work to prevent plastic pollution, including those in the waste management, recycling, and circular economy sectors. The firm says it has identified more than 200 investment opportunities and expects to be making initial investments shortly.

Spring Lane’s first fund closes above $150M:  Spring Lane Capital, a Boston-based private equity firm that provides both project finance and growth capital in the energy, food, waste and water sectors, closed its first fund with about $156 million. Spring Lane focuses on companies that deploy “distributed assets,” using equipment or facilities that are typically too small or not concentrated enough for traditional project finance.

Investors include  pension funds, endowments, family offices and banks, general partner Rob Day tells CleantechIQ, including BDC Capital, Fondaction, Fonds de solidarité FTQ and Palomino Capital.

He says he’s seen a large rise in interest from traditional institutional investors in sustainability as an area to invest in since he first started fundraising two years ago, particularly among US pensions that have been the slowest to jump into new markets. These investors “are interested in trying to figure out how they can invest into this clear long-term sustainability trend, but doing it in a way where they can generate market rate returns,” Day says.

Spring Lane also announced three new investments: a $21.4 million investment in Atlas Organics, a processor and composter that helps cities divert solid waste from landfills; an undisclosed amount of project equity as part of the $65 million financial close of a biosolids gasification facility in New Jersey that is being built by existing portfolio company Aries Clean Energy; and taking part in an $18 million fundraising — including both dedicated project finance and working equity capital — by Cambrian Innovation, which provides distributed wastewater and resource recovery solutions.

Clean energy focused VC firm closes first fund: Venture capital firm Clean Energy Ventures has closed its first fund with $110 million. The Boston-based manager will invest in early-stage advanced energy startups, and says it will “focus on technologies and business model innovations in the U.S. and Canada that are ready to be scaled and commercialized, and that have the potential to significantly mitigate global greenhouse gas emissions.” The fund was “significantly oversubscribed,” which CEV officials say is evidence of investor appetite for innovation in the energy sector. Former Energy Secretary Ernest Moniz chairs the firm’s strategic advisory board.

Startups raising capital

Farmer-financing platform gets $200M in funding: ProducePay, a Los Angeles-based platform that offers short-term loans to farmers, especially in Latin America, raised $205 million in a debt financing round this month, bringing the firm’s total debt and equity funding to $320 million since its 2015 founding. ProducePay looks to solve the problems that small farmers often face in getting financing, offering advance financing at various stages in the growing and harvesting process; it also runs an online marketplace to help farmers to find services and supplies. Investors in the debt finance round included Coventure and TCM Capital. Anterra Capital led a $14 million Series B funding round for the company in October 2018.

Alt-Dairy company raises $140 M from Temasek, others: FoodTech company Perfect Day raised $140 million in a Series C funding round, bringing its total funding to $200 million and making it one of the best-funded alternative dairy producers in the industry. The Bay Area startup will use the money to scale up its production and build partnerships with other food companies to bring more products to market. Perfect Day uses plants and fermentation techniques to make animal-free dairy products like milk and ice cream; its flagship ice cream product quickly sold out over the summer. The Series C round was led by Singapore’s Temasek, which was joined by existing investors including Li Ka-shing’s Horizons Ventures.

Cultivated meat startup gets seed funding: Meatable, a Dutch startup that is working to grow pork and beef in laboratories, has raised $10 million in seed funding, bringing its total funding to date to $13 million. The funding is coming mostly from existing investor BlueYard Capital, with some coming as well from the European Commission‘s Eurostars Programme and angel investors. Cultured meat startups are finding traction across Europe. Meatable plans to use its funding to work on overcoming cost and scale issues.

Other sustainability financing and related news

Nomura buys American sustainability-focused investment bank: Greentech Capital Advisors, an investment bank that specializes in deals in the cleantech and sustainability space, will be acquired by Japan’s Nomura Holdings. Greentech, based in New York and founded in 2009, will be rebranded as “Nomura Greentech” after the deal closes. Asia will be a growing focus for the firm, with founder and managing partner Jeff McDermott saying in a statement that it has become “very clear that Asia is going to be the largest and fastest growing region that requires our expertise. The deal also represents a chance for Nomura to grow its US presence as well as its expertise in sustainability. Nomura  has also formed the Nomura Research Center of Sustainability, because of the “growing need to accelerate the discussion on sustainability,” the firm says in a separate statement.

Sustainability-linked loans pick up steam across Asia: New World Development, a giant Hong Kong property developer, has taken out a HK$1 billion (US$128 million) sustainability-linked loan from Singapore bank DBS. The loan’s interest rate will come down if New World hits certain sustainability targets, including reducing greenhouse gas emissions, construction waste and energy and water use. It’s the first sustainability-linked loan for New World, which says it will use the proceeds to improve the climate resilience of its buildings, and for other general uses.

Separately, a Singapore-based REIT, Mapletree Logistics Trust, has moved into sustainable investing for the first time via a $200 million sustainability-linked loan from OCBC Bank. The six-year revolving credit facility was designed in conjunction with the rooftop solar installation program that Mapletree has adopted for its properties across the Asia-Pacific region. The loan’s interest rate will drop if the firm meets its solar installation targets.

Google grants $4M for cities’ climate action: Google says it has put $4 million into a new fund aimed at supporting  climate action. The fund, overseen by the nonprofit group ICLEI – Local Governments for Sustainability, will support nonprofits and academic groups that are using data to support climate change efforts in cities across Europe and Latin America. Separately, Google says it has expanded its Environmental Insights Explorer, a free online tool that helps cities measure and reduce their overall carbon emissions, to encompass more than 100 cities around the world.

Green bond for sustainability at Swedish airports: Swedish airport operator Swedavia issued a SEK 1 billion ($107 million) green bond to fund sustainability and climate change adaptation projects at airports across the Scandinavian country. The money will go to areas like renewable fuels and electrification of the airports’ ground vehicles and equipment, part of a goal of achieving zero CO2 emissions from operations at all 10 Swedavia airports by next year. “Swedavia’s ambition is to be a world leader in developing airports with the least possible climate impact,” Swedavia president and CEO Jonas Abrahamsson says in a statement.

Hundreds of institutional investors lobby governments on climate change: More than 600 institutional investors, controlling more than $37 trillion in combined assets, are urging the world’s governments to do more to fight the climate emergency and meet the goals of the Paris Agreement. Among the items that the investors are pushing for, in a statement released at the COP25 conference in Madrid, are phasing out thermal coal; putting a “meaningful” price on carbon; ending fossil fuel subsidies; and strengthening national targets to meet the Paris Agreement goals. “The global shift to clean energy is underway, but much more needs to be done by governments to accelerate the low carbon transition and to improve the resilience of our economy, society and the financial system to climate risks,” the statement says

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