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TPG has amassed private equity's largest war chest dedicated to technology aiming to curb climate change amid a growing scramble by investors drawn to one of the world's foremost global challenges.

Texas-based TPG said Tuesday it has landed $5.4 billion in funding for the first close of its new Rise Climate Fund, and is still targeting a total of $7 billion, up from an initial goal of $5 billion. Hank Paulson, formerly a Treasury secretary and CEO of Goldman Sachs, serves as executive chairman of the fund.

On the same day, Brookfield Asset Management announced the initial closing of a $7 billion climate-focused fund that has a goal of achieving a net-zero carbon economy. Dubbed the Brookfield Global Transition Fund, the vehicle will be hard-capped at $12.5 billion. If it meets its target, the fund would be the largest devoted to climate sustainability, according to PitchBook data.

Toronto-based Brookfield said its fund's mandate is to invest in clean energy and other sustainability strategies that will help carbon-intensive companies comply with Paris Agreement standards.

TPG and Brookfield are joining a wave of investors in the venture capital and PE industries that are seeking to back innovations that will limit or even remove planet-warming carbon emissions.

Earlier this month, growth equity firm General Atlantic announced it had formed BeyondNetZero, a team focused on targeting growth equity investments related to climate change. The firm reportedly has a $4 billion target for an upcoming fund that will invest in the sector.

Based in San Francisco, the Rise Fund was set up in 2016 as a specialized investment arm of TPG, in partnership with U2 lead man Bono and billionaire internet entrepreneur Jeff Skoll in an effort to meet the United Nations' Sustainable Development Goals, a collection of 17 global objectives meant to be accomplished by 2030.

The Rise Fund already has a range of sustainability-themed investments, including renewable natural gas marketing and environmental commodities company Element Markets, African wilderness protection agency Wilderness Holdings and plant-based food company Green Monday.

The Brookfield fund includes founding investment partners Ontario Teachers' Pension Plan Board and Temasek. PSP Investments and Investment Management Corporation of Ontario are also initial investors in the fund.

The new vehicles come during what's been a $100 billion-plus banner year so far for private equity mega-funds—vehicles defined as any that have raised over $5 billion.

Earlier this month, Hellman & Friedman announced the closing of its 10th flagship fund at $24.4 billion and The Carlyle Group is reportedly aiming to raise $27 billion for its next namesake vehicle—in what would be the largest private equity fund of all time, according to PitchBook data.

TPG and Brookfield's new funds mark private equity's 13th and 14th mega-funds, respectively, with at least one completed close this year, according to PitchBook data. For context, 18 mega-funds were closed in 2019, and 16 in 2020.

According to PitchBook’s Q2 2021 US PE Breakdown, at least seven of those 14 funds have raised over $10 billion each.

Separately, two other funds—led by KKR and Carlyle—have targeted or raised over $10 billion, but haven't closed yet.

TPG said its first close received investments from a range of LPs including Allstate, The Hartford, Ontario Teachers' Pension Plan Board, School Employees Retirement System of Ohio, State of Michigan Retirement System and the Washington State Investment Board.

Featured image by Xuanyu Han/Getty Images 

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