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Al Gore investment firm closes cleantech fund on $683m

London-based Generation Investment Management will invest its Climate Solutions Fund in private and public companies dedicated to solving global warming.

Generation Investment Management, an environmentally-focussed investment firm chaired by former US Vice President Al Gore, has closed its second fund on $683 million (€439 million).

Riding a wave of increased investor appetite for green tech vehicles, Generation’s Climate Solutions Fund will make investments of between $25 million and $30 million in a mix of private and public companies developing solutions to global warming, including technological advances in renewable energy, building efficiency, fossil energy, sustainable agriculture and carbon markets.

“Generation believes that sustainable development that addresses the climate crisis will be a significant driver of industrial and economic development over the coming decades,” David Blood, managing partner of Generation and former Goldman Sachs alternatives director, said in a statement. “However, there is clearly a significant gap between the capital needed and the capital currently deployed to create enduring solutions to the climate crisis.”

London-based Generation will invest the fund in 10 to 15 private companies, 10 to 15 small public companies ripe for take-privates and a small number of large public businesses, according to a Generation spokesman.

The firm will pursue “active ownership stakes” in its investments and will seek to seat one its partners on the boards of smaller portfolio companies.

The fund, which will favor no geographic region in its investment strategy, has already been partly deployed in a handful of companies, according to the spokesman. The spokesman declined to identify the names of the companies involved with the fund.

The Climate Solutions fund represents a significant deviation in investment strategy from Generation’s first investment vehicle, the $2.2 billion Global Equity Strategy Fund, which is still actively fundraising.  

Whereas Generation’s first fund almost exclusively invests in large-scale public companies not necessarily associated with environmental causes, its second will solely target green tech businesses. The Climate Solutions fund is also more comparable to a traditional private equity vehicle in that it will primarily invest in private companies and take-privates.

The limited partners for Generation’s second fund were derived entirely from its first fund’s investor based. Although Generation declined to identify individual LPs, major investors for the firm’s first fund included the California State Teachers Retirement System, Swiss investment bank Lombard ODH, and Australian superfund VicSuper.

Last November, Generation announced a collaboration with US venture capital heavyweight Kleiner Perkins Caufield & Byers in which Gore would become a partner at the San Francisco-based firm. Kleiner Perkins will advise Generation on relevant market insights, due diligence, and investment opportunities.