BlackRock Raises $673 mln for Climate-Focused Infrastructure Fund

According to Reuters, BlackRock Inc (BLK.N) has raised a target-beating $673 million for an infrastructure fund with backing from the French, German, and Japanese governments to invest in climate-focused initiatives in emerging nations, such as renewable energy.

The world's largest money manager thinks that the Climate Finance Partnership, which will be presented on Tuesday, will demonstrate how to mobilize private investment in developing nations to combat climate change, which is a sticking point at the United Nations climate negotiations in Glasgow. Investors have been hesitant to put money into riskier projects where there is no guarantee of a return.

State-owned development banks from France, Germany, and Japan, as well as philanthropic organizations like the Grantham Environmental Trust and the Quadrivium Foundation, are contributing 20% of the fund's capital and have pledged to bear losses before other investors.

While a number of multibillion-dollar renewable energy funds have been formed in the previous year to assist build out solar, wind, and other projects, the vast majority of the money has gone to countries with lesser risk for investors.

Emerging economies, such as those in Africa, Asia, and Latin America, will require about $1 trillion per year to help them transition to a low-carbon economy by 2050, according to BlackRock. Except for China, just $150 billion will be invested in 2020.

At the COP26 United Nations Climate Change Conference in Glasgow, BlackRock and the fund's other supporters are attempting to rally greater support for such emerging markets-focused initiatives. The new fund might aid industrialized countries in meeting a goal of raising $100 billion each year to aid poorer countries in combating climate change.

TotalEnergies (TTEF.PA), a French energy business, and institutional investors such as AXA (AXAF.PA) and Dai-ichi Life Insurance were among the fund's 22 backers. According to BlackRock, the fund easily surpassed its $500 million fundraising goal.

In a statement, BlackRock Chairman and Chief Executive Larry Fink stated, "This alliance provides proof that governments, philanthropic organizations, and institutional investors can come together to deploy capital at scale into emerging nations, which are most exposed to the impact of climate change." Fink has previously advocated for the integration of public and private money in the fight against climate change.

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

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

Kenya, Morocco, and Egypt, as well as Peru and Vietnam, where the government was "truly committed" to the energy transformation, were all interesting to investors, according to Giordano.

According to Edwin Conway, global head of BlackRock Alternative Investors, renewable energy in non-OECD nations is predicted to account for 49 percent of global energy capacity by 2050.

"Now, that's big... I believe we're talking about decades here," Conway remarked of the potential ahead.