Climate Investment, the venture capital firm founded by the Oil and Gas Climate Initiative, has launched its first growth equity strategy, New Private Markets has learned.
The Decarbonization Acceleration Fund has a $750 million target, a source familiar with the fundraise told NPM. The vehicle has held an “initial close” at approximately $350 million with 13 LP commitments, which largely comprise capital from the OGCI’s member companies.
Climate Investment, which rebranded earlier this year from OGCI Climate Investments, was founded by the 12 original members of the Oil and Gas Climate Initiative. The Initiative is a coalition of energy conglomerates with ambitions to reduce the negative environmental impact of the energy industry. These 12 members (Saudi Aramco, BP, Chevron, CNPC, Eni, Equinor, ExxonMobil, Occidental, Petrobras, Repsol, Shell and TotalEnergies) made equal commitments to CI’s inaugural venture fund, the $1.1 billion, 2017-vintage Catalyst Fund I.
For the Decarbonization Acceleration Fund, CI is pursuing a more traditional private equity fundraising approach by marketing to external investors. While DAF is open to institutional investors, CI is particularly targeting to strategic corporate investors both within and outside the energy industry that would find access to DAF’s portfolio companies helpful for their main business operations, the source told NPM.
Themes for the growth strategy will largely remain consistent with the venture strategy, the source said. The venture strategy focuses on carbon capture, energy efficiency and greenhouse gas reduction technologies. The thematic focus remains because technologies in these sectors have scaled since the launch of the venture fund six years ago, and companies in these sectors now require growth capital to scale their operations, the source said.
Climate Investments declined to comment for this story. But the firm previously mentioned its plans for a growth equity strategy last year. Chief executive Pratima Rangarajan told NPM: “We plan to focus in the successor strategy on the growth stage, rather than the early catalyst stage, because it is time to deliver impact. We can’t constantly be looking at early stage. As things stand, there has been a dramatic decline in the investment capital available to growth stage opportunities within the climate tech space. The capital has been very directed at early-stage venture.”