Brookfield Asset Management (BAM) and UAE-backed climate investment platform ALTÉRRA announced the launch of the Catalytic Transition Fund, aimed at directing capital into clean energy and transition assets in underserved emerging economies.

The new fund, to be managed by Brookfield, is being launched with a $1 billion anchor commitment from ALTÉRRA, with a target to catalyze up to $5 billion in total capital. Brookfield has also committed to contribute at least 10% of the fund’s total capital.

The CTF was initially unveiled in December 2023 at the COP28 climate conference in Dubai, alongside the launch of ALTÉRRA by the government of the UAE. ALTÉRRA was established with a $30 billion commitment from the UAE, and with a goal to mobilize $250 billion by 2030, aimed at driving private capital towards climate investments, and on improving access to climate finance in emerging markets, with a particular focus on the Global South.

H.E Majid Al-Suwaidi, CEO of ALTÉRRA, said:

“ALTÉRRA wants to challenge the status quo of how we invest in climate solutions, and our investment in the Catalytic Transition Fund reflects our ongoing commitment to go beyond business-as-usual. We are passionate about ensuring capital goes where it is needed and that it drives impact for countries, communities and business. Our catalytic capital will be deployed to supercharge investment in emerging markets – wherever we see great potential for delivering meaningful climate impact and positive economic return.”

According to Brookfield and ALTÉRRA, the new fund offers an opportunity to achieve greater emissions reductions per dollar invested than is available in developed markets, with emerging and developing countries outside of China receiving less than 15% of clean energy investment globally, despite representing nearly one third of global emissions.

Capital raised for the new fund will be deployed in target emerging markets, including in South and Central America, South and Southeast Asia, the Middle East, and Eastern Europe. In order to improve risk-adjusted returns for investors, ALTÉRRA is offering a capped return on its CTF commitment.

Brookfield said that since announcing the fund in December, the firm has been focused on developing CTF’s investment strategy and on identifying an advanced pipeline of potential investments, as well as pre-marketing to potential investment partners. A first close for the new fund is expected by the end of 2024.

Mark Carney, Chair and Head of Transition Investing at Brookfield Asset Management, said:

“The Catalytic Transition Fund is a private market solution to the global challenge of delivering transition investment to emerging markets. Brookfield is already a leading transition investor in these regions and has first-hand knowledge of the incredible opportunity and impact that is available in these chronically underfunded markets.”