First dedicated transition fund for emerging markets

A newly launched fund from Brookfield and ALTÉRRA promises to help fund the clean energy transition in emerging markets with a target of up to $5 billion.

The Catalytic Transition Fund received an anchor commitment of $1 bn from UAE-backed ALTÉRRA, with first close expected by the end of 2024.

With a target of $30 bn in global climate investments - and US$250 bn of institutional investment - by 2030, ALTÉRRA is the world's largest private investment vehicle for climate finance.

The fund offers capped risk-adjusted returns for private investors with at least 10% of total capital to be contributed by Brookfield to ensure alignment investment partners.

The capital will be deployed in South and Central America, South and Southeast Asia, the Middle East, and Eastern Europe.

As fund manager, Brookfield Asset Management has been put to work identifying the pipeline of potential investments and pre-marketing to possible investment partners since launch at COP28 in Dubai, in December 2023.

Outside of China, less than 15% of global clean energy funding goes to emerging markets. Yet, they represent nearly a third of global emissions and often return greater emissions reductions per dollar invested than developed countries.

Clean energy investment in emerging economies needs to increase six-fold to $1.6 trillion per year by the early 2030s, to reach the goals of the Paris Agreement.

Brookfield raised $15 bn for its first transition fund the Brookfield Global Transition Fund (BGTF) in 2022, and $10 bn for its second, the Brookfield Global Transition Fund (BGTF II), in 2024.

Mark Carney, chair and head of transition investing at Brookfield Asset Management, said the fund is a private market solution to the global challenge of delivering transition investment to emerging markets.

Brookfield already has "first-hand knowledge of the incredible opportunity and impact that is available in these chronically underfunded markets.

"Having this dedicated capital for emerging markets will complement our existing Brookfield Global Transition Fund strategy and further accelerate the growth of clean energy and transition investments in the future."

Majid Al-Suwaidi, ALTÉRRA CEO, said he hopes the fund will "challenge the status quo of how we invest in climate solutions" and "go beyond business-as-usual".

"While we are making progress in addressing climate change, we need to pick up the pace and scale significantly to meet our collective climate goals.

"We are passionate about ensuring capital goes where it is needed and that it drives impact for countries, communities and business. Our catalytic capital will be deployed to supercharge investment in emerging markets - wherever we see great potential for delivering meaningful climate impact and positive economic return."