It's not easy being green.
Despite investor interest in investing more capital in the energy transition, the sector is so new that many managers do not have track records with successful exits in the new space, said Adam Toczylowski, Boston-based managing principal at consultant Meketa Investment Group Inc.
"It's definitely a tricky part of process for any of these managers," he said.
Some managers have attempted to solve the problem by hiring teams with expertise in renewable energy, or showing potential investors transactions they had made over the past few years, he said.
Staff at the New Jersey State Investment Council noted Brookfield Asset Management's renewable energy investment track record in a Nov. 10, 2021, staff report on Brookfield Global Transition Fund, which closed in June with $15 billion. The council, which oversees the $91.5 billion New Jersey Pension Fund, Trenton, committed $300 million each to the fund and a co-investment sidecar vehicle. The Brookfield fund is expected to invest across real asset sectors including renewable power, utilities and industrials. At the time, Brookfield had $57 billion in renewable assets under management.
"While there are many renewable energy asset managers around the world, Brookfield was one of the first and is now one of the largest," the staff report said.
The Brookfield Infrastructure Fund series has made 14 renewable energy investments that "produced strong returns with limited losses," the report said.
BlackRock Inc. kicked-started its energy infrastructure business by hiring a team, giving the firm the expertise and track record in the strategy.
The team behind BlackRock's new infrastructure fund and its predecessor traditional energy funds joined the firm in 2017 through BlackRock's acquisition of First Reserve's energy infrastructure business. At the time, the team had announced or closed on 21 energy infrastructure investments since 2010, almost all negotiated on an exclusive basis.
Mark B. Florian, managing director and head of BlackRock's global infrastructure funds business, had been the head of First Reserve's energy infrastructure team, putting him in charge of the business for 14 years. Before that, he had a 23-year career at Goldman Sachs where he served on the investment committee for the infrastructure business.
