Franklin Templeton launches climate impact fund for VC and private equity

Franklin Templeton has launched a climate fund for venture capital and private equity, New Private Markets can exclusively report. The Climate Alpha Opportunity Fund has a $300 million fundraising target and will be marketed to Franklin Templeton’s wealth clients. The fund has the capacity to take LP positions in pooled venture and growth funds focused on climate as well as making direct and co-investments, according a source with knowledge of the fund.

Franklin Templeton declined to comment when contacted by NPM for this story.

The firm is targeting companies that contribute to climate change mitigation or have the potential to displace high-emitting technologies and processes, focusing on sectors including food and agriculture, industrial decarbonisation, water and biodiversity, energy, resource efficiency and circular economy, NPM understands.

The fund is led by managing director Richard Piliero, who has recruited a team to support the strategy. It has been registered with the SEC.

Franklin Templeton offers many products for its clients to access private markets and alternatives investments. It manages $274 billion of client capital that is invested in private fund structures or other products, a document seen by NPM shows. This includes $91 billion in real estate and infrastructure, $75 billion in private credit, $69 billion in private equity, venture capital and secondaries, $21 billion in digital and other strategies and $17 billion in hedged strategies. A handful of these have sustainability themes: the Social Infrastructure and the Green Energy and Stable Infrastructure funds are two such examples.

But this fund is the first time Franklin Templeton has offered its clients a climate impact fund in private equity.

“We believe private markets offer great potential in the energy transition space due to the long lockup periods and governance control,” Franklin Templeton writes in a thought leadership paper, Energy Transition: Accelerating Investment Opportunities, the lead author of which is global head of sustainability Anne Simpson. “We’ll see substantial growth in markets, technologies and innovations required to transition the economy. This is especially true in private equity and venture capital, where we’ve seen growing funding and increased deals in the last couple years, with a major focus on combined renewables, storage, circular economy and mobility.”