Brookfield Asset Management has secured a US$1 billion commitment from Alterra Management, which is backed by the United Arab Emirates, for a US$5 billion fund to invest in clean energy and transition assets in emerging economies.
Since announcing the launch of the Catalytic Transition Fund (CTF) in December 2023, Brookfield has been focused on developing its investment strategy, identifying an advanced pipeline of potential investments, and conducting pre-marketing to potential investment partners.
The capital raised by the CTF will be deployed in target emerging markets, including South and Central America, South and Southeast Asia, the Middle East, and Eastern Europe. Brookfield will contribute at least 10% of the fund’s total capital. The CTF is expected to achieve its first close by the end of 2024.
In Southeast Asia, the CTF is looking to deploy capital in large and growing markets such as Vietnam, Thailand, Indonesia, Malaysia and the Philippines. These markets have clear ambitions to support the transition to a net-zero economy and strong corporate demand for decarbonization, Brookfield says.
Launched at COP28 in Dubai, Alterra is the world’s largest private investment vehicle for climate finance. The fund is committed to deploying US$30 billion in climate investments and aims to catalyze US$250 billion with partners by 2030.
Emerging and developing economies outside of China receive less than 15% of the global investment in clean energy, despite representing nearly one-third of global emissions and often yielding greater emission reductions per dollar invested than in developed countries. To align with the goals of the Paris Agreement, clean energy investment in these markets will need to increase six times over current levels to reach US$1.6 trillion per year by the early 2030s.
Managed by Brookfield and driven by Alterra's catalytic capital, the CTF seeks to accelerate decarbonization investments while generating attractive risk-adjusted returns in traditionally underserved emerging markets.
Alterra is offering a capped return on its CTF commitment, improving risk-adjusted returns and unlocking compelling investment opportunities for private investors. By acting as a catalyst, Alterra aims to significantly expand private finance and fuel ambitious new climate strategies in both developing and developed markets.
Brookfield, listed in New York and Toronto, has a strong track record as the world’s largest transition investor among private fund managers. The first fund in the Brookfield Global Transition Fund series (BGTF I) raised a record US$15 billion in 2022. In February 2024, and the second fund in the series (BGTF II) announced a first close of US$10 billion, putting it on track to be larger than its predecessor.
