TPG’s $10B Climate Fund Shows Investors Aren’t Giving Up on the Energy Transition

TPG has secured $10 billion from investors for its second private equity vehicle, focused on climate-related investments.

The TPG Rise Climate II fund, which the firm announced in 2023, was scheduled to wrap up its fundraising by the end of September, sources familiar with the matter told Bloomberg. 

TPG Rise Climate II fund targets private companies across areas such as clean energy, electric mobility and sustainable materials. Investors in the fund include the New York City Employees’ Retirement System, and the State of Michigan Retirement System, public filings show.

Alterra allocated approximately $1 billion to the fund. The sovereign-backed investor also allocated another $500 million to a TPG vehicle focused on climate-related opportunities in emerging markets.

The fund also follows TPG’s inaugural climate-focused fund, which launched in 2021.

Both funds are led by former Treasury Secretary Hank Paulson, who serves as executive chairman, and focus on companies involved in the transition towards low-carbon energy. That investment theme has gained momentum as power-intensive data centers expand rapidly. This is helping climate-focused strategies attract investor interest despite political opposition to some green policies in the U.S.

In an August regulatory filing, TPG reported that its Rise Climate platform had accumulated $17.1 billion in total commitments. At the time, that figure included $7.4 billion raised for the second fund. The platform invests globally in a range of strategies including buyouts, carve-outs and growth equity deals.

Recent investments and exits include the $4.75 billion sale of clean energy developer Intersect Power to Alphabet, the acquisition of Siemens Gamesa’s wind-turbine operations in India and Sri Lanka, and an investment in electrical grid services provider Pike Corp, Bloomberg noted.

BloombergNEF estimates that investments in the energy transition topped $2 trillion last year, with spending on clean-energy technologies growing faster than investment in fossil-fuel projects.

Photo: Image via Shutterstock/ Lamyai