climate solutions

Tikehau triples target to €3bn for Decarbonization Fund II, closes Impact Lending I

While TPG and EQT have warned of slowing fundraises for their impact strategies, Tikehau’s ambitions are untempered by the macroeconomic environment.

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Tikehau will seek between €2 billion and €3 billion for its second decarbonization fund, a growth equity and buyout strategy that will launch towards the end of 2023, the firm announced on its H1 results call last week. The fund has already secured an investment from TotalEnergies, deputy chief executive Frederic Giovansili said.

The target for TDF II is a significant scale-up of Tikehau’s debut decarbonization fund, which was called T2 Energy Transition Fund and closed in 2021 at €1.15 billion. This is particularly ambitious given many impact fund managers have been tempering their fundraising expectations amid a market-wide slowdown in LP commitments. TPG, for example, warned earlier this summer that it may miss its $3 billion target for Rise III. Fundraising for EQT’s Future fund has also slowed, the firm said earlier this month.

“The environment has not yet stabilized. Fundraising is obviously taking more time, and LPs are being more selective in their allocations,” said deputy chief executive Henri Marcoux. “But we are convinced that we have the right product to keep capturing clients going forward.” Tikehau’s decarbonization fund taps into a strong secular megatrend, Marcoux said.

Other factors may also be driving Tikehau’s confidence. Managing partner Mathieu Chabran said the firm’s efforts in recent years to expand its investor base globally (for example, it opened a New York office in 2019, where Chabran is now based) have been “paying off”. Among its investors are at least four US-headquartered institutions, two Chinese institutions, and investors based in Japan, South Korea, the Emirates and Israel.

Tikehau is also seeing significant inflows of capital from democratizing platforms: 26 percent of the capital Tikehau collected in H1 of 2023 had been raised from by private investors. The firm has set up a proprietary platform to distribute its strategies to individual investors.

Also of note:

  • Tikehau has closed its first Impact Lending Fund at €450 million, significantly higher than its €350 million target, the firm announced.
  • 65 percent of the firm’s current debt is ESG-linked (the loan margin is linked to achieving ESG KPIs)