The Scoop
Private equity giant General Atlantic is “facing [industry-wide] headwinds” as it seeks to raise a second climate-focused fund because of anti-ESG rhetoric in the US, its global head of climate said in an interview.
General Atlantic closed its $3.5 billion BeyondNetZero fund in 2022, and is considering raising another fund that will follow a similar strategy of targeting sectors of the green economy focused on decarbonization, energy efficiency, and emissions management, Gabriel Caillaux told Semafor, adding he was nevertheless confident the firm would succeed.
When fundraising for its initial climate-focused fund, its “hit rate [with investors] was probably 100%,” he said. This time, however, an “overlay of noise” has proved challenging as it looks to raise again: “Our opportunity set hasn’t changed, the performance of the portfolio is great, zero doubt that this trend — or the need to continue to push climate investing — is going to exist for 30 years,” he added. “The biggest issue is right now, we’re in this focus lull, where the noise is pushing investors slightly away from the market.”
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Prashant’s view
Caillaux’s comments encapsulate a frustration among climate-focused investors that whatever momentum the clean tech sector had is being sapped by a growing politicization, particularly in the US, around various forms of green technology. He said that while other issues such as US President Donald Trump increasing tariffs, geopolitical tensions in the Middle East and Ukraine, and persistently high interest rates were also challenges, the biggest issue his team faced was concern among investors over American pressure — even if largely rhetorical — on ESG-related investments.
“We speak to a bunch of these big US pensions,” Caillaux said. “They all believe we have to do something, [but] they’re all nervous about the perception they might have if they’re in a red state or a blue state. And that’s a bit of a shame.”
Notable
- Whereas General Atlantic expects to meet its target, others are less upbeat: The early-stage fund Earth Foundry last month halved its initial fundraising goal of $100 million, it told Axios.
- Clean-tech startups that raised money from big-name investors have for months faced challenges in garnering fresh funds, the Financial Times reported in September, noting that backers were worried about interest rates and delays in the reception of federal tax credits.