Blackstone Inc. has launched a credit strategy to back companies that help reduce carbon emissions, an initiative that fits into the asset manager’s plan to invest $100 billion in such businesses during the next decade.
The private-capital giant, with about $731 billion in assets under management, has a variety of other investment strategies, such as energy, infrastructure and private equity, that it can draw on to help meet that goal. Blackstone’s new sustainable resources credit platform seeks to benefit from the massive...
Blackstone Inc. has launched a credit strategy to back companies that help reduce carbon emissions, an initiative that fits into the asset manager’s plan to invest $100 billion in such businesses during the next decade.
The private-capital giant, with about $731 billion in assets under management, has a variety of other investment strategies, such as energy, infrastructure and private equity, that it can draw on to help meet that goal. Blackstone’s new sustainable resources credit platform seeks to benefit from the massive capital requirements—estimated at more than $100 trillion by the International Renewable Energy Agency—needed by 2050 to shift the world economy to clean energy.
Credit investments will account for a big portion of that capital, said Robert Horn, a senior managing director at Blackstone Credit and global head of its sustainable resources group. He leads the new strategy.
“The sectors that are undergoing the most change right now—whether that’s power generation, real estate or transportation—historically have consumed significant amounts of credit because they’re hard-asset sectors,” Mr. Horn said.
The new strategy, he said, looks to back clean-energy project developers as well as the industry’s suppliers of products and services. It could invest $50 million to $1 billion per deal through different debt instruments. The firm can also structure transactions as green financings or other sustainability-linked loans, according to Mr. Horn.
Credit capital is also suitable to finance the efforts that businesses increasingly are making to improve their own environmental, social and governance practices in response to public and regulatory pressure, including looming carbon taxes, said Jean Rogers, Blackstone’s newly hired global head of ESG.
“There’s so much ESG capital flowing into the markets, but it’s typically going into the public equity space and not really driving change,” she said.
Blackstone’s deals could create incentives for companies to achieve carbon-reduction targets, Ms. Rogers added. As an example, Mr. Horn cited the firm’s recent investment in a company that helps businesses buy power and use energy more efficiently. Blackstone tied the interest charged on the deal’s financing to the portion of purchased power that comes from renewable sources, as well as emission reductions from the company’s building-efficiency projects, he said.
“There are some investments where that’s more applicable than others,” he said of the incentives. “When companies are on a journey to become more sustainable, that could be a great tool.”
Blackstone’s new credit platform represents the institutionalization of its intensifying focus on the shift to clean energy, Mr. Horn said. He noted that the firm has invested $15 billion in such businesses since 2019.
In one investment, Blackstone committed roughly $3 billion to back loans for residential solar and home-efficiency projects, working with GoodLeap LLC and other sustainable-focused lenders, according to a news release. Earlier this month, the firm committed about $3 billion to renewable-energy developer Invenergy Renewables Holdings LLC and in January 2020 led an $850 million recapitalization of solar-power company Altus Power America Inc.
“In the last five years, we came to a firm view that sustainability, ESG, was fundamentally impacting the value of assets, both positively and negatively,” Mr. Horn said. “Investing in the energy transition and climate-change solutions is one of Blackstone’s key themes.”
Write to Luis Garcia at luis.garcia@wsj.com
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