Ares raises $2.2bn for climate infra

Partner Andrew Pike says the GP will focus on early-stage investments, as it raised $1.4bn for its debut energy-transition fund plus $800m in ‘related transaction vehicles’.

Los Angeles-based Ares Management Corporation announced last Thursday the closing of its inaugural Ares Climate Infrastructure Partners Fund on $1.4 billion, plus an additional $800 million in what the firm is calling “related transaction vehicles”.

When reached for comment, Ares was not willing to divulge the specifics of these “related transaction vehicles”, nor the internal rate of return for the fund. What is known is that the $1.4 billion raised came from an international group of investors spanning North America, Europe, Asia and the Middle East, 30 percent of whom have not worked with Ares in the past. The capital – over 50 percent of which has already been deployed – will be used to invest in equity, preferred equity and structured debt.

Ares will target investments in assets and companies across the energy transition, including renewables, energy efficiency, storage, vehicle electrification and transmission. Additionally, these investments will tend to be in their early stages, according to Andrew Pike, partner and co-head of Ares Infrastructure and Power.

Though the asset management firm has a history of climate-related infrastructure investments – having invested over $2 billion in such projects since 2015 – this fund will be its first to be wholly dedicated to the green economy. Nevertheless, the Ares team seems to have circumvented the usual difficulties that come with raising a first vehicle in a sector.

Pike chalked this up to the firm’s aforementioned past investments, telling Infrastructure Investor: “We see significant addressable market opportunity and growing global demand for renewable and sustainable-based investing, which we believe we are well positioned to meet given our team’s track record of climate infrastructure investing and the success of this latest fundraise.”

He added: “Our team is well situated to manage complex transactions and provide tailored investment solutions earlier in the life cycle, while also providing flexible capital solutions across debt and equity to invest broadly in the sector. With our team’s value-add thesis and deep industry knowledge, we pride ourselves on being builders of new assets.”

The closing of Ares’ first of a potential series of climate-focused infrastructure funds comes almost exactly one year after Pike and his fellow partner Keith Derman sat down with Infrastructure Investor to discuss the firm’s interest in accelerating the energy transition through climate infrastructure investing.