Four years and whiplash-inducing policy shifts have not dimmed veteran investor Jim Coulter’s enthusiasm for impact investing.
Climate and impact investments will make a meaningful contribution to TPG’s goal of doubling its assets under management to some $500 billion, Coulter said on the company’s recent earnings call. Coulter co-founded TPG in 1992 and took over the firm’s $19 billion TPG Rise impact strategy in 2021.
Rise includes a growing number of climate-focused funds. The global TPG Rise Climate Fund II is said to be nearing a $5 billion close; the emerging markets-focused TPG Rise Climate Global South Initiative is targeting $2.5 billion; and TPG’s first climate infrastructure fund has secured $2 billion toward a $6 billion target.
The effect of the political “atmospherics,” as Coulter called it, on Rise’s portfolio has been “muted” and “activity remains very high.” Ignore the noise from Washington, DC, he counsels, and “pay attention to what’s happening on the ground.”
Climate rising
The firm’s climate strategy has been racking up big deals, such as this month’s $2.2 billion take-private of solar developer Altus Power, which took advantage of lower valuations stemming from US policy headwinds. “This disruption,” says Coulter, “is creating opportunity.”
The Rise Climate fund led a $750 million investment in Intersect Power in 2022, and topped it up in December with $800 million via a partnership with Google to accelerate Intersect’s development of clean power for new data centers. In October, the fund joined Singapore’s GIC in a €6.7 billion buyout of German home decarbonization firm Techem. And it stood up Rubicon Carbon, a marketplace for buying and selling carbon offsets.
Last February, Rise Climate notched an exit when Nextracker went public just a year after it invested $500 million in the solar tracking company. The 2021 vintage Rise Climate Fund I has a gross IRR of 29%, according to the firm.
Green data centers
“We’re seeing an absolute explosion of spending around the grid in the US, driven in part by data centers, but really a more-broad based electrification of our economy,” Coulter told investors. That is giving rise to opportunities to create new models and partnerships such as the firm’s investment in Intersect, which alone could catalyze tens of billions of dollars in clean energy investment, he said.
“You’ll see a series of announcements from us of other opportunities to build out clean power backbones for what’s happening in AI. Whether it’s Deep Seek or Open AI, the one thing that’s clear is more power will be needed.”
That energy demand, Coulter added, “is opening up a very large investment opportunity for us.”
Global opportunity
Last year, 65% of global energy-related spending went to clean energy. “There’s a lot of attention on the US right now,” said Coulter, but “make sure that you pay attention to what’s happening around the world.”
Despite the newfound enthusiasm for oil and gas, not all countries have fossil fuel resources, and renewable energy gives them a measure of independence. The Techem acquisition, a European decarbonization play, is Rise Climate’s largest deal to date.
Nearly three-quarters of TPG Rise’s investors are outside of the US, said Coulter. “They don’t really care much about what’s happening with US policy.” He added, “So far, we haven’t seen anyone step back.”
