Goldman Sachs raises $1.6 billion private capital for climate fund
Goldman Sachs' Private Equity arm has raised $1.6 billion for a ESG targeted fund
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Goldman Sachs Asset Management, the fund arm of Goldman Sachs, said on Tuesday it had raised $1.6 billion for its first private equity fund focused on investing in companies providing climate and environmental solutions.
The final close of GSAM's Horizon Environment & Climate Solutions I comes as investors increasingly turn their attention to companies that can help in the world's fight against global warming.
Goldman Sachs Group Inc. headquarters stands at 200 West Street in New York, U.S., on Monday, Aug. 9, 2010 (Ramin Talaie/Bloomberg via Getty Images / Getty Images)
The fund, launched in 2021, provides so-called "growth capital" to companies further along in developing solutions in clean energy, sustainable transport, waste and materials, sustainable food and agriculture and ecosystem services.
"Lots of organizations are trying to operate more sustainably and looking for solutions that enable them to do that," Ken Pontarelli, head of sustainable investing for private markets within Goldman Sachs Asset Management, told Reuters.
"The center of the bullseye that we look for ... is if we can invest in companies that have products and services that enable other organizations to cost-effectively meet their sustainability objectives, that's a winner."
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David Solomon, chief executive officer of Goldman Sachs Group Inc., during a Bloomberg Television at the Goldman Sachs Financial Services Conference in New York, US, on Tuesday, Dec. 6, 2022. Solomon sees "bumpy times ahead" for the global economy, m (Photographer: Michael Nagle/Bloomberg via Getty Images / Getty Images)
GSAM's Horizon fund has made 12 investments so far of between $80 million-$90 million including in Northvolt, a Swedish battery developer and Recover, a company that recycles textile waste to create sustainable fibers.
Each investment targets and is measured on specific sustainability outcomes such as acres of wetlands restored or tons of CO2 sequestered, Pontarelli said.
While investors have long invested in real assets such as wind and solar, or in early stage venture capital, the demand for the fund showed they were increasingly willing to back bigger companies, Pontarelli said.
"In 2019 you saw greater willingness of institutional allocators to think about climate as a big theme beyond just the hard assets," he said. "In every quarter [since] we've seen more client interest in and around this theme."
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Workers arrive at Goldman Sachs headquarters in New York, US, on Wednesday, June 15, 2022. The Securities and Exchange Commission is looking into whether some investments for the funds are in breach of ESG metrics promised in marketing materials, one (Photographer: Michael Nagle/Bloomberg via Getty Images / Getty Images)
In December private equity firm General Atlantic launched a $3.5 billion climate fund while a month earlier Morgan Stanley Investment Management launched a $1 billion private equity strategy to invest in companies that will help reduce 1 gigatonne of carbon dioxide emissions.
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Goldman Sachs Group
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GS | THE GOLDMAN SACHS GROUP INC. | 596.24 | +14.41 | +2.48% |