IMP Matrix Rating: C4
What: TPG Rise Climate is a $7bn+ private equity fund, investing primarily in buyout opportunities (~50%), with the remaining invested in growth (~35%) and structured equity (~15%). Investments will primarily be in OECD regions (~70%) with an opportunistic approach in non-OECD regions (~30%). The Fund expects to actively engage with portfolio companies throughout the hold period, securing at least one board seat and working alongside the management team to add value.
Who: The Fund seeks to address the climate crisis at scale by investing in companies that are averting / removing a meaningful amount of greenhouse gases (“GHGs”) from the atmosphere. It focuses on 5 climate sub-sectors: clean energy, enabling solutions, decarbonized transport, greening industrials, agriculture and natural solutions.
How Much Impact: Rise Climate expects to measure carbon yield (estimated tons of averted or removed CO2e emissions per $ of equity deployed) to ensure both the effectiveness of the solution and the impact return on capital are deeply understood. Y Analytics, a TPG spinoff, will provide these analyses.
Our Contribution: We invested a small ticket in a very oversubscribed offering, so our contribution is minimal.
Impact Risk: The team’s relative inexperience with impact may lead to impact drift in which the Fund makes investments with neutral or even negative impact. The high profile of this Fund and the housing of this Fund within the Rise Platform should help keep the team on track (and our pipeline review revealed that all pipeline companies has a strong impact thesis). Moreover, the team does not consider social justice or vulnerable populations a key part of its strategy, which may lead to unintended negative consequences of investments on certain populations. Lastly, it’s possible that the same amount of GHG emissions could be achieved with smaller sums of money. The large size of the Fund requires the team to write large checks that may not necessarily be the most efficient way of achieving the desired impact.
Sample Investment: Nextracker, the leading global provider of intelligent, integrated solar tracker and software solutions for utility-scale solar projects around the world.