Australian Ethical launches climate-focused private markets fund

Australian Ethical has launched a new fund for wholesale investors to access institutional grade private markets investments, with a cornerstone commitment of up to $125 million from the Clean Energy Finance Corporation (CEFC).

CEFC's commitment to the fund comes alongside $500 million in seed investment from Australian Ethical for its new Growth Opportunities Fund, a scaled, diversified portfolio of renewable energy, infrastructure, natural capital and climate tech assets.

The fund aims to deliver 11-13% in returns per annum after fees and expenses over a seven-year period whilst providing quarterly liquidity, the ethical investment manager said.

It is an open-ended fund that blends investments alongside like-minded institutional capital, delivering purposeful, long-term exposure to unlisted real assets.

The fund also has an impact advisory forum that is separate to the fund's investment team, who review and monitor the impact reporting across the portfolio.

Australian Ethical head of private markets Adam Roberts explained the characteristics of the fund.

"The Growth Opportunities Fund gives wholesale investors access to a wide range of impactful private investments providing immediate diversity without having to commit and tie-up large amounts of capital in a single private equity or venture capital investment," he said.

"Drawing on two decades of impact investing experience, we apply institutional rigour and active industry engagement to identify solutions to global challenges. We invest where we see enduring tailwinds and the potential for attractive long-term, risk adjusted returns."

Meanwhile, CEFC executive director Heechung Sung said its commitment, which is being made by transferring existing investments it holds into the fund, highlights the evolution of Australia's sustainable finance market.

"This investment demonstrates how the CEFC can use its existing assets to help catalyse new market offerings and support the next phase of growth for sustainable finance," Sung said.

"By backing a new institutional vehicle with CEFC investments, we are helping to establish a scalable platform for climate-focused assets, crowding in capital and expanding the reach of sustainable finance to a broader audience to accelerate Australia's decarbonisation."

Australian Ethical chief investment officer Ludovic Theau echoed Sung's sentiment, stating that the most significant opportunity to support Australia's net zero transition lies within the private sector.

"We're leveraging our expertise, capability and networks to partner with some of the best specialists and managers to democratise access to these opportunities for wholesale channels, and we're co-investing capital to take advantage of and support these opportunities together," Theau said.

"With the road to net-zero before us, this fund allows investors to capitalise on the long-term growth opportunity this presents and feel good about where their money is invested.

"We're pleased to receive the support of the Australian government through the partnership with the CEFC on this fund."