Carlyle’s second renewables fund tops $1bn with help of New York Common

Carlyle’s second renewables offering edged closer to its target following a commitment from a top US public pension system.

New York State Common Retirement Fund in December invested $200 million in Carlyle Renewable & Sustainable Energy Fund II. This helped lift total commitments to more than $1 billion as of the same month, according to Carlyle’s year-end report.

As such, the vehicle is now within striking distance of a $1.6 billion target. It is also already bigger than the strategy’s debut fund, closed in 2021 at just over $700 million. Fund II’s hard-cap is $2 billion, Buyouts reported last year. The firm declined to comment.

Carlyle’s strategy focuses on acquiring control or minority stakes in renewable and sustainable energy companies and assets “through a private equity value-creation approach,” a 2023 presentation to Boston Retirement System said. Fund II will deploy $75 million to $250 million in 10 to 15 investments.

Of particular interest are infrastructure, service and equipment assets. On the renewables side, these include solar, wind and battery storage systems, and on the energy transition side, electric vehicle infrastructure and services, distributed resources and decarbonization. Dealflow is sourced in OECD countries.

Renewable and energy transition funds have demonstrated vigor in today’s slow market, owing to rising LP demand for products aligned with net-zero and ESG policies. There is also a growing perception that major secular drivers are behind investing in climate change themes.

The trend was clearly apparent in 2022, when impact capital-raising reached an historic high, New Private Markets reported. In 2023, however, activity fell back to $23.8 billion raised, or almost half of the prior year’s total.

Fundraising could be renewed this year, as multiple offerings near the finish line. The largest may be Brookfield Asset Management’s second energy transition vehicle, which this month secured an initial $10 billion against an expected $20 billion target.

Carlyle’s Fund II was 26 percent invested as of December, the year-end report said. Recent deals include NineDot Energy, a community-scale battery energy storage systems developer, which in January saw $225 million invested by Carlyle and Manulife Investment Management.

A month earlier, Copia Power, a renewable energy platform formed by Carlyle in 2021, closed a $1.2 billion debt financing for construction of storage projects in Arizona’s Harquahala Sun complex. The firm has so far committed more than $700 million of equity to Copia.

Carlyle’s strategy is led by Pooja Goyal, CIO of the infrastructure group and head of renewable and sustainable energy.