IMM Investment Global launches $300m second energy transition fund

Clean Energy Transition Fund II will focus on OECD-based companies with proven technologies in the green energy space that are ready to commercialise and expand into Asia.

South Korean alternative asset manager IMM Investment Corporation’s overseas investment arm IMM Investment Global is looking to raise $300 million for the latest iteration of its clean energy transition fund.

Clean Energy Transition Fund II will invest in companies in OECD countries looking to expand into Asia that are focused on the energy transition, including renewable energy, electric vehicles, hydrogen, plastic recycling, carbon capture and biofuels.

According to IMM Investment Global’s head of energy and infrastructure John Yoon, the firm is aiming for a final close before the end of the year. Currently focused on South Korea-based anchor investors for the first round of investment for the fund – which the firm expects to close on between $100 million and $150 million within the first half of this year – IMM will look to investors based in Hong Kong, Singapore, the Middle East and potentially Europe and North America for the fund’s final round of investment, Yoon told Infrastructure Investor.

“We have $100 million to $250 million of pipeline secured, [which makes this] a semi-blind fund where the investors will know what we will be investing into,” he added.

The firm’s CETF I, which launched in early 2021, reached a roughly $150 million final close in December 2021. More than 80 percent of the commitments to the fund came from South Korean investors, with the remainder from investors in Hong Kong and Singapore.

CETF I is fully deployed, having invested in four companies including US renewable energy company Apex Clean Energy, which builds and operates green energy projects including utility-scale wind and solar, as well as Montreal-based EV battery recycling technology company Lithion Recycling and Houston-based plastic waste recycling technology firm Encina Development Group. Also among the first fund’s investments is a joint venture with US renewables developer Peregrine Energy Solutions, which focuses on greenfield battery storage projects across North America.

The gross IRR for the fund is currently more than 20 percent.

According to Yoon, CETF II will follow a similar strategy, predominantly focusing on early- to late-stage growth companies outside Asia and partnering with them to enable their expansion into the region. What differentiates CETF from other infrastructure and energy transition funds is its focus on relatively new companies with already proven technologies in the green energy space that are ready to commercialise, he said.

“We are a growth equity fund, and we have a very strong Asia expansion strategy,” Yoon said. “Our target cheque size is somewhere between $25 million to $50 million, which allows us to invest into companies that would [otherwise] be approached by the larger infrastructure and energy transition funds one or two years later.

“We look for companies [that are] migrating from being a technology company to a company that is building a business model. In that sense, we’re different from a VC fund and a traditional infrastructure fund. We’re right in the middle, where there’s a one- or two-year window, where you might take a bit more risk but then the return is significantly higher if you time the investment window correctly.”