Brookfield Asset Management and Alterra Management Limited announced the launch of the Catalytic Transition Fund, which is focused on directing capital into clean energy and transition assets in emerging economies.
With the urgent need to cut emissions and accelerate the climate transition, the Brookfield-managed CTF will harness a $1 billion commitment by ALTÉRRA funds to catalyze up to $5 billion in total capital for deployment into emerging markets. Since announcing the launch of CTF in December 2023, Brookfield has been focused on developing the investment strategy, identifying an advanced pipeline of potential investments and pre-marketing to potential investment partners.
Launched at COP28 in Dubai, ALTÉRRA is the world’s largest private investment vehicle for climate finance. It responds to the call for more ambitious funding models for the climate transition, particularly in developing countries, and to the urgent need to accelerate and scale climate action. At this critical juncture for driving climate action, ALTÉRRA is committed to deploying $30 billion in climate investments with the goal to catalyze $250 billion with partners by 2030.
Emerging and developing economies outside of China receive less than 15% of global clean energy investment, despite representing nearly one third of global emissions and often yielding greater emissions reductions per dollar invested than in developed countries. To align with the goals of the Paris Agreement, clean energy investment in these markets will need to increase six times over current levels to reach $1.6 trillion per year by the early 2030s.
CTF represents a unique private capital approach to crowd in capital for clean energy and transition assets in emerging markets. Managed by Brookfield and driven by the catalytic capital of ALTÉRRA, it will accelerate decarbonization investments while generating attractive risk-adjusted returns in traditionally underserved emerging markets. ALTÉRRA is offering a capped return on its CTF commitment, improving the risk-adjusted returns for investors in the Fund and unlocking compelling investment opportunities for private investors. By acting as a catalyst, ALTÉRRA aims to significantly expand private finance and fuel ambitious new climate strategies in both developing and developed markets.
The strategic partnership between Brookfield and ALTÉRRA benefits from Brookfield’s global leadership and strong track record as the world’s largest transition investor among private fund managers. The first fund in the Brookfield Global Transition Fund series (BGTF I) raised a record $15 billion in 2022. In February 2024, the second fund in the series (BGTF II) announced a first close of $10 billion and is on track to be larger than its predecessor.
For CTF, the capital raised will be deployed in target emerging markets, including in South and Central America, South and Southeast Asia, the Middle East, and Eastern Europe. At least 10% of the Fund’s total capital will be contributed by Brookfield ensuring that its interests align with investment partners. A first close for CTF is expected by the end of 2024.
Mark Carney, Chair and Head of Transition Investing at Brookfield Asset Management said: “The Catalytic Transition Fund is a private market solution to the global challenge of delivering transition investment to emerging markets. Brookfield is already a leading transition investor in these regions and 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.”
H.E Majid Al-Suwaidi, CEO of ALTÉRRA, said: “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. ALTÉRRA wants to challenge the status quo of how we invest in climate solutions, and our investment in the Catalytic Transition Fund reflects our ongoing commitment to go beyond business-as-usual. 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.”
