Australian private equity firm Adamantem Capital has received commitments worth A$160 million ($118.5 million), from two government-owned funds, for its second fund to drive emission reduction across its portfolio.
The limited partners are Australian green bank, the Clean Energy Finance Corporation (CEFC), and Aware Super (formerly First State Super), Australia’s second-largest industry superannuation fund. They will serve as the cornerstone investors of the fund.
Adamantem Capital Fund II, which targets more than A$700 million, is the first Australian private equity fund to adopt a “cradle to grave” approach to the emissions impact of its assets, according to a statement.
The fund is also CEFC’s first investment in private equity.
Adamantem Capital Fund II targets mid-market companies, with a focus on consumer staples, healthcare and business-to-business services, enabling CEFC to influence the sustainability profile of a significant part of the Australian economy.
“It is estimated that 60 per cent of Australia’s national emissions come from companies outside the ASX 300,” CEFC said.
The Adamantem fund’s portfolio companies will be required to implement emission reduction targets — either eliminate or offset their emissions within a decade.
They will also be required to have an independent consultant undertake an energy and emissions baseline measurement covering Scope 1 and 2 emissions, in accordance with the International GHG Protocol.
CEFC will work with the fund’s newly-established Emissions Reduction Committee to develop and oversee detailed pathways for each portfolio company to achieve its emissions reduction target.
“The private equity sector is an asset class that is still in the early stages of climate transition. With more than $30 billion of assets under management in Australia’s private equity and venture capital industry, engaging this sector is critical to the continued decarbonisation of the Australian economy,” commented Ian Learmonth, CEO of CEFC.
Aware Super’s senior portfolio manager of private equity growth assets, Jenny Newmarch, added: “We know that climate change poses one of the most significant financial risks to our portfolio and our members’ retirement savings in the long term. We believe we can generate strong long-term returns while also supporting the economy to transition.”
She said that investments into private equity funds would help support a more sustainable and resilient economy, following Aware Super’s successful climate engagement activities from its public equities portfolio.
Adamantem Capital, established in 2016, manages more than A$1 billion in assets and is focused on investing in mid-market opportunities in Australia and New Zealand.