Ashish Kumar, left, and Pete Murphy

Nuveen has partnered with UK charity the Shell Foundation to invest $100 million over five years in climate resilience, climate change mitigation and energy access in emerging markets.

The capital will come from Nuveen’s $218 million Global Impact Fund and the firm’s parent organisation, TIAA, a source close to Nuveen told New Private Markets. Nuveen also expects to raise additional third-party capital for this climate mandate, the source said.

Nuveen has not yet fixed the commitment volumes from TIAA, its impact fund or other external capital, and has not yet broken down the $100 million allocation into per-year investment targets. Nuveen declined to comment on fundraising plans.

The Shell Foundation will source investment opportunities for Nuveen, including companies in which the Shell Foundation is already an investor. The Shell Foundation will not be a limited partner in a Nuveen-managed fund but may co-invest alongside Nuveen on a deal-by-deal basis, two sources close to the partnership told New Private Markets.

The Shell Foundation deploys around $40 million annually in catalytic capital, grants, loan guarantees and other flexible financing for climate solutions in emerging markets. “This catalytic funding is aimed to de-risk and scale up game-changing impact ventures and blended finance solutions to reach underserved communities in Africa and Asia – which presents a large market and impact opportunity,” Ashish Kumar, the Shell Foundation’s climate and innovation lead, told New Private Markets.

Nuveen closed GIF, its first private equity impact fund, earlier this year at $218 million, below its $400 million target, after nearly two years of fundraising.

Shell Foundation’s Kumar added: “We can leverage our years of evolved market understanding and capital deployment thesis to help Nuveen to channel the much-needed institutional growth capital to impact ventures. This in turn could drive those ventures’ scale and impact multi-fold, towards a path to commercial sustainability, while delivering market-driven positive social change for the most under-served communities in emerging markets.”

“This [partnership] is about the information and connections that Shell Foundation has [for us] to be able to better understand these markets,” Pete Murphy, head of impact and ESG at Nuveen, told New Private Markets. “The Shell Foundation has been active in this space long enough to understand all the players and value chains in this space. For the Shell Foundation, it’s about gaining a better understanding of what institutional capital providers look like. We’re helping them [Shell Foundation] prepare their companies for raising this type of growth capital that allows them to access the next stage of growth.”

Nuveen will invest in three sectors, said Murphy: distributed renewable energy, such as solar panels and more efficient grid technology; agriculture, such as sustainable agricultural technologies and providing financing for small holder farmers; and the electrification of transportation.

“As impact investors, we are broadly focused on the UN’s Sustainable Development Goals and the Paris Agreement. But not all of those are solvable with institutional private equity capital,” continued Murphy.

“There are certain problems that require partners that can provide more flexible capital to de-risk the market. There are a lot of industries that have been de-risked to the point where they are ready for institutional capital, but those companies don’t necessarily have the connections within traditional private equity and traditional asset management to reach out and be viewed as credible.”