GIC, the $744 billion Singaporean sovereign wealth fund, has spotted a space in the climate investing market, and has set up a private equity “sustainability solutions group” to take advantage of it.
The investor’s annual report states: “In 2023, we formed focused groups within asset classes to seize climate-related investment opportunities. One of these groups is the Sustainability Solutions Group (SSG) in our private equity department. This year, SSG launched an investment programme for green assets. It is the result of us identifying a funding gap for nascent or maturing climate technologies such as green steel and battery storage.
“This is an area where we believe long-term investors like GIC can plug a financing gap effectively. While the companies in this segment hold long-term promise, they often find themselves caught between traditional buckets of capital. These investments would not meet the return hurdle of venture capital, and at the same time, lack the track record to attract infrastructure finance.”
The report does not disclose the GIC staff that make up the sustainability solutions group, but head of Latin American direct investments Wolfgang Schwerdtle is listed as its co-head. Nor does the report give an indication of how much capital the group has available to invest. GIC declined to disclose how much capital the investment programme for green assets has to deploy, or if any investments have been made yet when contacted by New Private Markets.
GIC is among the world’s largest private markets investors. It has an 18 percent allocation to private equity and 13 percent to real estate. In the climate space, it has allocated to Brookfield’s Global Transition Fund, and invested in green metal developer H2 Green Steel. Senior vice-president for European private equity Craig Wyllie was named one of our influencers in private markets sustainability earlier this year.
The sovereign wealth fund is not alone in identifying a funding gap in climate investment. Research conducted by CREO, a syndicate of family offices and foundations with an interest in combating the climate crisis, found that there is a growth equity “missing middle” in climate finance as capital gravitates towards infrastructure and venture capital.
From 2012-23, more than one-quarter (27 percent) of the capital raised for climate investment in North America went to venture capital. In Europe, 51 percent of the capital went to infrastructure funds over the same time frame. Private equity and growth capital represented relatively small slices of the pie. “This gap is critical for companies to scale and commercialise climate solutions effectively,” the CREO report notes.