Sovereign wealth funds are leaning into impact strategies for climate tech, infrastructure and regional development as both financial opportunities and national priorities.
State-owned funds collectively manage more than $13 trillion in assets. Nearly seven in 10 now factor UN Sustainable Development Goals into their investment decisions, up from less than a year earlier.
ImpactAlpha has tracked more than a dozen sovereign wealth fund commitments over the past year, spanning clean energy, infrastructure and multi-sector impact vehicles across Asia, Europe, the Middle East and North America.
Brookfield Asset Management’s second Global Transition Fund secured a $1.5 billion commitment from Norges Bank Investment Management, the manager of Norway’s sovereign wealth fund. The fund, which invests in clean energy and decarbonization solutions, closed on $10 billion last year.
Climate tech is also drawing commitments from smaller sovereign funds building domestic venture ecosystems. New Mexico State Investment Council, the state’s sovereign wealth fund, invested Lux Capital, Frist Cressey Ventures, Scout Ventures, Acequia Capital and Morpheus Ventures.
Infrastructure
Infrastructure deals are spanning urban regeneration and transport. COIMA ESG City Impact Fund, Italy’s largest urban regeneration fund, secured €50 million ($54 million) from CDP Real Asset, the real estate and infrastructure arm of Italy’s sovereign wealth fund, to convert Milan’s Olympic Athletes Village into 1,700-bed student accommodation. The fund has raised more than €900 million ($972 million) to date.
The State Oil Fund of Azerbaijan invested €34.5 million ($36.1 million) in Italo, Italy’s first private high-speed rail operator, through a fund managed by Global Infrastructure Partners, now part of BlackRock.
Mubadala, a $330 billion sovereign wealth fund of Abu Dhabi, has been at the center of a series of major AI financing initiatives, including the Global AI Investment Partnership, with Microsoft and BlackRock, which aims to raise $30 billion for AI data centers and infrastructure.
Mubadala also provided a $440 million anchor commitment to Bicycle Capital when the Latin America-focused growth fund launched in 2022.
Seeding impact
Sovereign funds are building cross-border partnerships to drive regional development. Saudi Arabia’s Public Investment Fund and the Hong Kong Monetary Authority are launching a $1 billion fund to help Hong Kong and Greater Bay Area companies expand into Saudi Arabia, supporting the kingdom’s efforts to diversify its economy beyond oil.
Multi-sector impact funds are also attracting sovereign capital in Asia. ABC Impact, a Pan-Asia impact investment firm, closed its second fund at over $600 million with backing from Singapore’ state-owned global investment company Temasek, and an unnamed Southeast Asian sovereign wealth fund. The fund invests in climate resilience, inclusive finance, healthcare and sustainable food systems across Asia.
Temasek also backed Amperesand, a spin-out from Singapore’s Nanyang Technological University developing high-power, semiconductor-based transformers for next-generation grid infrastructure. It is also an investor in Pivot Bio, whose microbial soil inputs aim to reduce dependence on synthetic fertilizers and which raised a $430 million Series D in 2021
The Gobi Dana Impak fund, a partnership between Malaysia’s sovereign wealth fund Khazanah Nasional and VC firm Gobi Capital, invested an undisclosed amount in ArmourZero to scale its low-cost cybersecurity software for small businesses across Southeast Asia.
Nigeria Sovereign Investment Authority allocated capital to TPG’s first and second Rise Funds and a fund managed by Nigerian impact investor Alitheia Capital. The $2.8 billion sovereign fund, established in 2012, also invests directly in healthcare, power, agriculture and transport infrastructure.
