Investcorp launches $750m climate-focused investment platform

Asset manager plans 10 to 15 investments in companies that support decarbonisation technology in the next four to five years

Investcorp helps companies that it has invested in to decarbonise their operations, says co-chief executive Rishi Kapoor. AFP

Alternative asset manager Investcorp has launched a $750 million climate-focused investment platform that aims to invest in companies focused on developing innovative products and technology to reduce emissions globally.

It plans to make 10 to 15 investments in such companies in the next four to five years, with each funding round in the range between $50 million and $75 million, Investcorp co-chief executive Rishi Kapoor told The National.

Investcorp, which counts Mubadala Investment Company as its biggest shareholder, will invest in companies in North America, Europe, the Middle East and Asia with proven technology that supports decarbonisation efforts, especially in the Global South.

“We feel that the appeal, and more importantly, the need for these products and services is most acute in the Global South because that is the part of the world that is arguably facing a disproportionate share of the risk associated with climate change,” Mr Kapoor said.

“Through our investment in these companies all over the world, we can help them lower their economic costs through accelerated growth and take them to the Global South at a much more affordable and attractive price point and therefore help the ... economies to mitigate the risk of climate change.”

Bahrain Mumtalakat Holding Company, the country's sovereign wealth fund also confirmed that it is partnering with Investcorp to anchor the platform.

Investcorp's announcement comes as Dubai hosts the Cop28 climate conference and the world discusses ways to boost investments in decarbonisation technologies.

Global investment in energy transition technologies must quadruple to $35 trillion by 2030 to stay in line with commitments made under the Paris climate agreement, according to a recent report by the International Renewable Energy Agency (Irena).

Investments in renewable energy technologies reached a record of $1.3 trillion last year but that figure must rise to about $5 trillion annually to limit temperature increases to 1.5ºC above pre-industrial levels, the Abu Dhabi-based agency said.

Meanwhile, investments of up to $13.5 trillion will be needed by 2050 to help hard-to-abate sectors such as production, energy and transport to move to a sustainable and carbon-neutral future, a World Economic Forum report said this week.

Investcorp, with $50 billion of assets under management, aims to become net zero by 2050. It also plans to support companies that it has invested in to decarbonise their operations with climate-friendly policies.

“We have aligned ourselves, 100 per cent using our own proprietary responsible investment framework, with the companies that we invest into, and have them lay out and map an agenda towards decarbonisation recognising full well that we own these companies for a relatively short period of time, typically around four or five years," Mr Kapoor said.

“But setting them on that path is the important bit and during that journey with us, carefully monitoring and measuring their actual progress in terms of emissions reduction against targets and reporting those is another important element.”

The company has investments in more than 70 companies around the globe in sectors such as technology, real estate, e-commerce and infrastructure.

IPO push

As part of its growth strategy, Investcorp plans to list more companies on regional and international stock exchanges as part of its growth strategy.

Earlier this month, it listed its subsidiary, Investcorp Capital, which offers capital financing services in the alternative investments space, on the Abu Dhabi Securities Exchange after it raised Dh1.66 billion ($451 million) by selling 720 million ordinary shares or 32.85 per cent of its total issued share capital.

“We have 70 companies in our portfolio, from North America to Europe to the Middle East to India to China to South-East Asia," Mr Kapoor said.

"It wouldn't be surprising if, at any given point in time in each of those five regions, there's at least one company that is looking at a potential listing, which is actually the case today.

“In India, there are two filings we've already made, one for the company in our private equity portfolio called Medi Assist and one for listing a Reit (real estate investment trust). Similarly, there are one or two others in Europe, in the Middle East that we are looking at [for] a potential listing.”

Investcorp is bullish about investment opportunities in the US and Europe, despite tighter monetary policy in the two regions.

“The developed markets of the US and Europe, which currently have roughly 75 per cent to 80 per cent of our investment, continue to be the biggest, deepest pool of capital and investment opportunity,” Mr Kapoor said.

“Are conditions tighter in the US and Europe today relative to the Middle East and India? The answer is unequivocally yes. But do those tighter conditions actually create some very attractive investment opportunities today for us to deploy capital into, not just in private equity, but also in asset classes like private credit, infrastructure and so on? The answer is also a strong yes in those markets.”

Investcorp aims to boost investments in India, Asia’s third-largest economy, the Middle East as well as in South-East Asia.

The Middle East continues to be "a bright spot" despite the geopolitical tensions, and "India has also attracted a fair bit of positive attention", Mr Kapoor said.