Morgan Stanley Investment Management Closes 1GT Climate Private Equity Fund at $750 Million

Rhea-AI Summary

Morgan Stanley Investment Management (MSIM) has closed its 1GT climate private equity fund at $750 million in equity capital commitments. The fund targets growth-oriented investments in companies aiming to mitigate climate change in North America and Europe. 1GT's goal is to avoid or remove one gigaton of CO2e emissions by 2050.

Key points:

• Investor group led by institutions from Europe, Japan, and North America
• Half of the 1GT team's financial incentives tied to achieving the emissions reduction goal
• Fund targets investments in mobility, power, sustainable food, agriculture, and circular economy
• 1GT is an Article 9 fund under the Sustainable Finance Disclosure Regulation
• Current investments include Instagrid, Huel, and Everstream Analytics

Positive

• Successful closure of 1GT climate private equity fund at $750 million
• Clear focus on growth-oriented investments in climate change mitigation
• Tangible and measurable climate goal of avoiding or removing one gigaton of CO2e emissions by 2050
• Alignment of team's financial incentives with climate goals
• Leveraging Morgan Stanley's resources to support portfolio companies' growth and ESG reporting

Negative

• None.

Insights

Financial Analyst

The closure of Morgan Stanley Investment Management's 1GT climate private equity fund at $750 million is a significant development in the sustainable finance sector. This fund's unique approach of tying 50% of the team's financial incentives to achieving one gigaton of CO2e emissions reduction by 2050 demonstrates a strong commitment to climate-focused investing.

For Morgan Stanley (MS), this fund launch could potentially:

• Enhance its reputation in ESG and climate-focused investing
• Attract more climate-conscious investors to its asset management business
• Diversify its revenue streams in the growing sustainable finance market

The fund's Article 9 classification under SFDR adds credibility and may appeal to European investors seeking high-standard sustainable investments. While the $750 million size is relatively small compared to MS's $240 billion alternative investment business, its strategic importance and potential for growth in the climate tech sector could make it a valuable addition to MSIM's portfolio.

Climate Technology Expert

The 1GT fund's focus on growth-oriented investments in climate mitigation technologies is well-timed with the rapidly expanding market for climate solutions. Key sectors targeted by the fund, including mobility, power, sustainable food and circular economy, are at the forefront of climate innovation.

The fund's investments in companies like Instagrid (portable batteries), Huel (sustainable nutrition) and Everstream Analytics (sustainable supply chain) indicate a diverse approach to addressing climate challenges across different industries. This strategy could lead to:

• Accelerated development and scaling of critical climate technologies
• Creation of new market opportunities in sustainable products and services
• Potential for high returns if these companies successfully capture market share in growing green sectors

The emphasis on transparent and independently measured climate goals sets a new standard for accountability in climate-focused private equity. This approach could influence broader industry practices and attract more capital to climate tech investments.

The growth-oriented fund invests in companies seeking to mitigate climate change

NEW YORK--(BUSINESS WIRE)-- Morgan Stanley Investment Management (MSIM) announced today that it has held the final close of the 1GT climate private equity fund (1GT) at $750 million of equity capital commitments. 1GT targets growth-oriented investments in companies in North America and Europe aiming to collectively avoid or remove one gigaton of carbon dioxide-equivalent (CO2e) emissions from the Earth’s atmosphere from the date of investment through 2050. The investor group was led by a number of institutions in Europe, Japan and North America.

Commenting on the close, Vikram Raju, MSIM’s Head of Climate Private Equity Investing and 1GT, said: “We are pleased to have arrived at the final close of 1GT, a highly focused fund that is providing capital at the critical growth stage to companies whose products and services enable meaningful reduction in the global carbon footprint. 1GT’s investors saw the unique opportunity to invest in a fund with a tangible, transparent, and independently measured climate goal, which directly ties to the team’s incentive compensation.”

Half of the 1GT team’s financial incentives will be tied to achieving the avoidance or removal of one gigaton of CO2e emissions by 2050.

“1GT's close represents the best of Morgan Stanley's thinking around delivering fiduciary returns to our clients while providing transparent, transformational climate impact,” said David N. Miller, Head of Morgan Stanley Private Credit and Equity. “We are also able to deliver to our growth stage investees the insight, expertise and access that come from being a leading global financial services firm.”

Part of MSIM’s $240 billion alternative investment business, 1GT targets investments in private companies across mobility, power, sustainable food, agriculture and the circular economy. 1GT is an Article 9 fund under the Sustainable Finance Disclosure Regulation, which promotes environmental or social characteristics and integrates sustainability into the investment process in a binding manner.

The 1GT team will leverage Morgan Stanley’s considerable resources to partner with portfolio companies to pursue earnings growth, multiple expansion and enhanced exit potential, while helping to increase climate change mitigation and improve ESG monitoring and reporting. Examples of 1GT’s investments to date include high-performance portable battery provider Instagrid, sustainable nutrition brand Huel, and sustainable supply chain services company Everstream Analytics.

About Morgan Stanley Investment Management
Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than 1,300 investment professionals around the world and $1.5 trillion in assets under management or supervision as of June 30, 2024. Morgan Stanley Investment Management strives to provide outstanding long-term investment performance, service, and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide. For further information about Morgan Stanley Investment Management, please visit www.morganstanley.com/im.

About Morgan Stanley
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240927980442/en/

Media Relations:

Morgan Stanley: Alyson Barnes

alyson.barnes@morganstanley.com

Source: Morgan Stanley Investment Management

FAQ

What is the size of Morgan Stanley's 1GT climate private equity fund (MS)?

Morgan Stanley Investment Management's 1GT climate private equity fund closed at $750 million in equity capital commitments.

What is the main objective of Morgan Stanley's 1GT fund (MS)?

The 1GT fund aims to avoid or remove one gigaton of carbon dioxide-equivalent (CO2e) emissions from the Earth's atmosphere from the date of investment through 2050.

Which sectors does Morgan Stanley's 1GT fund (MS) target for investment?

The 1GT fund targets investments in private companies across mobility, power, sustainable food, agriculture, and the circular economy.

How are the 1GT team's incentives structured in Morgan Stanley's climate fund (MS)?

Half of the 1GT team's financial incentives are tied to achieving the avoidance or removal of one gigaton of CO2e emissions by 2050.

What are some examples of investments made by Morgan Stanley's 1GT fund (MS)?

Examples of 1GT's investments include Instagrid (high-performance portable battery provider), Huel (sustainable nutrition brand), and Everstream Analytics (sustainable supply chain services company).