Blackstone lands most of green energy credit fund’s $6bn-$7bn target

The credit fund and a similarly-focused equity fund are expected to close in 2023, so Blackstone may soon have up to $13bn of dedicated capital for near-term energy transition investing.

Blackstone is nearing the target set for a green energy credit offering debuted last year, its second major initiative in the energy transition space.

The vehicle, unveiled last July as Blackstone Green Private Credit Fund III, raised $4.4 billion in 2022, the firm reported in its fourth-quarter and year-end earnings. Of the total, $832 million was collected between October and December.

This means the fund has banked just over 60 percent, or perhaps more than 70 percent, of its $6 billion to $7 billion target, disclosed in October by president and COO Jonathan Gray. It is expected to wrap up later this year, sources told affiliate publication Buyouts.

Fund III emerged with Blackstone’s creation in 2022 of a sustainable resources platform under the $246 billion Blackstone Credit. Focused on renewable energy opportunities in North America and Europe, its strategy is to invest flexibly across the debt spectrum, including in investment grade credit, non-investment grade credit and preferred and convertible securities.

Investing by sector is broad in nature. Areas of interest are residential solar and home efficiency; renewable electricity generation and storage; products, services, technologies and natural resources that enable the energy transition; decarbonised transportation; sustainability-linked loans; financing of environmental projects; and other energy infrastructure.

By taking this approach, the vehicle will contribute to Blackstone’s aim to deploy $100 billion to climate and energy transition solutions over the next decade.

Energy transition is rare bright spot

Climate and energy transition strategies are a rare bright spot in an otherwise rocky fundraising market. Capital raising of this ilk seems to be running counter to overall trends, with a plethora of offerings, sponsored by managers both big and small, entering the market.

The reasons for this are clear. Many LPs are seeking opportunities in harmony with their net-zero and other ESG policies. In addition, there is a growing perception that there are major secular drivers, as well as billions in government incentives, behind investing in sustainability themes.

Blackstone’s private equity group last June rolled out Blackstone Energy Transition Partners IV, targeted to bring in more than $6 billion. Like Blackstone Green Private Credit Fund III, it is slated to close later this year, suggesting the firm may soon have as much as $13 billion of dedicated capital for near-term energy transition investing.

Dealmaking by the sustainable resources platform is already under way. In October, for example, Blackstone Credit said it provided a $525 million SLL-structured facility to Enstructure, a marine terminals and logistics company, to refinance debt and support growth.

And in November, ClearGen, a sustainability finance business backed by the platform, said it invested in a portfolio of partnership interests in 25 wind farms, totalling 1.4 net gigawatts of generation capacity in the US.

The green energy credit strategy is headed by Robert Horn, who joined Blackstone in 2005 from Credit Suisse’s global energy group. He leads a global team of about 40 professionals, including European head Simon Hayden, formerly with EIG, and senior managing director Craig Harris, formerly a C-level energy executive.

Blackstone declined to provide a comment on this story.