WEBVTT - Energy Transition Fund Frenzy 0:00:00.120 --> 0:00:02.840 Hi everyone, I'm just gonna get right to it. There's 0:00:02.880 --> 0:00:05.160 a lot of money going into the energy transition right now. 0:00:05.280 --> 0:00:07.320 I'll give a couple of examples. There appears to be 0:00:07.320 --> 0:00:10.000 a sort of renaissance in climate tech venture capital this year, 0:00:10.000 --> 0:00:13.680 with according to Pitchbook, nearly fifteen billion investment in h one, 0:00:15.240 --> 0:00:17.960 nearly matching the previous full year record. And I just 0:00:17.960 --> 0:00:20.920 saw being a publisher report on EV related spacks raising 0:00:20.920 --> 0:00:22.599 ten point two billion in the past two months in 0:00:22.600 --> 0:00:25.439 the public markets. But today we're gonna talk about even 0:00:25.520 --> 0:00:29.600 bigger stuff. Asset managers raising huge funds to invest in 0:00:29.640 --> 0:00:33.519 the energy transition, so things like wind and solar projects, 0:00:33.600 --> 0:00:37.920 other renewables like geothermal, EV charging networks, batteries, anything and 0:00:37.960 --> 0:00:40.800 everything zero carbon, as well as investments in the company's 0:00:40.840 --> 0:00:43.720 doing these projects and supplying the kit. Okay, So just 0:00:43.720 --> 0:00:46.000 to name a few of these funds we're recording on 0:00:46.000 --> 0:00:50.080 on July Yesterday, on the twenty eight, Brookfield announced a 0:00:50.080 --> 0:00:52.600 seven billion dollar fund that's on its way to twelve 0:00:52.600 --> 0:00:57.720 point five billion target TPG. The day before announced a 0:00:57.760 --> 0:00:59.760 five point four billion dollar fund on its way to 0:01:00.040 --> 0:01:02.560 seven billion target, and back in April we saw eight 0:01:02.600 --> 0:01:06.600 point four billion from Copenhagen Infrastructure Partners and four point 0:01:06.680 --> 0:01:09.800 eight billion from black Rock. Okay, so, in his latest 0:01:09.800 --> 0:01:13.399 piece for Bloomberg Opinion, Nat Bullard, chief content officer and 0:01:13.720 --> 0:01:16.880 friend of Switched On, talked about this frenzy and fundraising. 0:01:17.160 --> 0:01:18.720 We've gotten that on the show to tell us about 0:01:18.720 --> 0:01:20.560 it and to give us a few frameworks for how 0:01:20.600 --> 0:01:23.320 to think about it. Along with this weekly column, Bloomberg 0:01:23.400 --> 0:01:26.240 users can catch Nat every Wednesday at eleven am Eastern 0:01:26.640 --> 0:01:29.160 where he hosts Asked BANF, a weekly show where he 0:01:29.200 --> 0:01:31.120 gets into it with a BENF analyst on their recent 0:01:31.160 --> 0:01:34.280 work and users can ask questions live. The next ask 0:01:34.319 --> 0:01:36.560 BNF is on August four, where he'll talk with BENIF 0:01:36.560 --> 0:01:39.920 analysts Vicky Cumming and Maya Godamer about the asset owner's 0:01:40.000 --> 0:01:43.320 path to net zero emissions. Register on NF dot com 0:01:43.400 --> 0:01:45.279 or s M and R go on the Bloomberg terminal. 0:01:45.640 --> 0:01:48.600 As always, does not provide investment or strategy device and 0:01:48.640 --> 0:01:50.000 you can hear the full dist claimer at the end 0:01:50.040 --> 0:01:52.400 of the show. Him Mark Taylor, and you're listening to 0:01:52.400 --> 0:02:02.320 switched on the BENF podcast. Now, Welcome Mark, Thanks for 0:02:02.320 --> 0:02:04.160 having me. It's nice to be back. It's always great 0:02:04.160 --> 0:02:07.840 having you on the show. Thanks for coming to Thank you. Okay, 0:02:07.880 --> 0:02:10.639 So we kind of decided to do this one really quick. 0:02:10.680 --> 0:02:13.079 We just started talking about it this morning because there's 0:02:13.120 --> 0:02:16.480 so much going on in this corner of the market. 0:02:16.560 --> 0:02:18.000 Can you get put it in your ownwards kind of 0:02:18.040 --> 0:02:20.600 what's going on in the market and kind of describe 0:02:20.600 --> 0:02:22.800 why you decided to write about it this week. So 0:02:23.240 --> 0:02:27.040 we're recording on Thursday of the twenty nine of July. 0:02:27.120 --> 0:02:32.400 And on Tuesday July, we got noticed that two big 0:02:32.440 --> 0:02:38.680 alternative asset managers, TPG and Brookfield, have closed between them 0:02:38.760 --> 0:02:42.360 just under twelve and a half billion dollars worth of 0:02:43.160 --> 0:02:48.400 climate or climate transition funds, so big private equity funds 0:02:48.440 --> 0:02:52.160 designed to be deployed broadly around the theme of climate. 0:02:52.840 --> 0:02:56.760 Now for reference, those are very very big funds, even 0:02:56.800 --> 0:02:59.960 within the normal realm of like an energy or infrastructure fund. 0:03:00.760 --> 0:03:03.360 They're not even the only multibillion dollar funds that have 0:03:03.400 --> 0:03:06.160 been closed this month. I think I looked back and 0:03:06.160 --> 0:03:09.080 found three or four others, and I found a number 0:03:09.080 --> 0:03:12.200 that are announced intentions to be that size. Those funds 0:03:12.200 --> 0:03:15.720 themselves aren't even fully closed. There at five point four 0:03:16.080 --> 0:03:20.160 and seven billion dollar funds respectively. That could go up 0:03:20.200 --> 0:03:23.760 to seven and twelve and a half billion, So we're 0:03:23.760 --> 0:03:27.000 talking about potentially just under twenty billion dollars of funds 0:03:27.000 --> 0:03:31.280 that have come in. And it's just an extraordinary moment, 0:03:31.480 --> 0:03:35.600 certainly in general, but also I think given the history 0:03:36.680 --> 0:03:39.880 rather fraught history in the last decade of fundraising either 0:03:39.920 --> 0:03:44.280 at the early stage or later stages for anything climate related, 0:03:44.640 --> 0:03:46.640 it just sort of caught our eyes, shall we say, 0:03:46.720 --> 0:03:49.000 not just mine, but pretty much everybody we work with, 0:03:49.120 --> 0:03:51.960 everybody in my guard of professional network. So I figured 0:03:52.360 --> 0:03:54.320 let's put a little more sunlite on this and talk 0:03:54.360 --> 0:03:56.960 about it a bit more. It was so, you know, 0:03:57.280 --> 0:03:59.480 I don't want these ord shocking, but yeah, you know, 0:03:59.520 --> 0:04:01.720 Cutter I such this week that it kind of caught 0:04:01.960 --> 0:04:05.480 caught us off guard. We even stopped tracking these types 0:04:05.520 --> 0:04:08.160 of fundraises a few years ago because nothing was going 0:04:08.200 --> 0:04:10.520 on like it, which just wasn't really happening. We had 0:04:10.560 --> 0:04:14.680 to go through that sad process of what we call deprecation. Yeah, 0:04:15.120 --> 0:04:17.760 taking a taking a product that was that was sort 0:04:17.760 --> 0:04:21.960 of a fallow field within within the larger pasture of 0:04:22.000 --> 0:04:25.320 things that we cover in research, and say this is 0:04:25.320 --> 0:04:27.200 probably something that we don't need to vote a lot 0:04:27.240 --> 0:04:28.599 of time too, because there's just not a lot of 0:04:28.600 --> 0:04:31.479 activity and a lot of inbound interest. And here we 0:04:31.520 --> 0:04:34.560 are and what's the reverse in a direction I don't know, 0:04:35.080 --> 0:04:37.160 right and and now and now we have something. Though. 0:04:37.200 --> 0:04:38.920 There's one thing to say about that, which is that 0:04:39.560 --> 0:04:41.960 this also shows that it was no longer probably running 0:04:41.960 --> 0:04:46.520 through such specialized specialty financial channels too. It was no 0:04:46.680 --> 0:04:52.720 longer potential limited partners coming through a specialty funnel, if 0:04:52.760 --> 0:04:57.000 you will, to then go back out into a specialty market. 0:04:57.480 --> 0:05:00.880 What it was instead is the world's collective pool of 0:05:00.960 --> 0:05:04.880 limited partners going to a pretty well established funnel of 0:05:04.880 --> 0:05:09.520 the world's biggest alternative asset investors. And that's that. In 0:05:09.600 --> 0:05:12.400 many ways, it follows a pattern that we don't really 0:05:12.400 --> 0:05:15.400 need to track because it is already very well tracked 0:05:15.400 --> 0:05:18.880 in general within the world of finance and capital raising. 0:05:19.600 --> 0:05:21.960 It says that this happens to be taking place not 0:05:22.080 --> 0:05:24.800 for a real estate fund, not for an infrastructure fund 0:05:24.800 --> 0:05:29.400 in general, but for specific climate transition. Let me give 0:05:29.400 --> 0:05:32.600 you one more g whiz thought on that is, ten 0:05:32.680 --> 0:05:35.279 years ago, when we were tracking this more closely and 0:05:35.279 --> 0:05:37.000 all this stuff, I talked to a friend of mine 0:05:37.040 --> 0:05:39.080 who worked at a private equity right and I was like, hey, 0:05:39.279 --> 0:05:42.000 you guys should look at renewables. It's getting getting pretty cool. 0:05:42.040 --> 0:05:44.400 And the answer, you know, I talked to him multiple 0:05:44.440 --> 0:05:47.400 times about this, and it was always it's not big enough. 0:05:47.600 --> 0:05:49.919 You know, the funds that would be raised that we 0:05:49.920 --> 0:05:52.360 would do, they don't match them the numbers that we 0:05:52.480 --> 0:05:55.560 are typically used to looking at. Well, this this p shop. 0:05:55.680 --> 0:05:58.240 They are on the list that you mentioned of a 0:05:58.279 --> 0:06:00.520 funds that have announced, you know, and don't even think 0:06:00.520 --> 0:06:03.400 they're gonna be you know, in the top ten of size. 0:06:03.480 --> 0:06:07.159 You know. So like things have changed, Things have certainly changed, 0:06:07.200 --> 0:06:09.520 and we can actually track that change. Weirdly, out about 0:06:09.560 --> 0:06:15.960 the same time that you had prospective fundraisers sort of 0:06:16.000 --> 0:06:19.800 saying that nothing was big enough for us to invest in, 0:06:20.400 --> 0:06:22.960 we saw the assets being created that later on they 0:06:22.960 --> 0:06:24.880 could invest it. In fact, right about the same time 0:06:24.920 --> 0:06:28.280 as when we saw the first multibillion dollar club deals 0:06:28.320 --> 0:06:30.839 for offshore wind in Europe, which actually were a way 0:06:30.960 --> 0:06:34.320 of kind of of kind of kickstarting things into a 0:06:34.400 --> 0:06:36.960 scale of capital that finally mattered. I remember the first 0:06:36.960 --> 0:06:38.880 time I ever talked to sovereign funds, and this was 0:06:38.920 --> 0:06:42.280 even earlier than even earlier than the time that you're describing, 0:06:42.320 --> 0:06:47.599 so let's say two thousand nine. Their problem was being like, yeah, actually, 0:06:47.640 --> 0:06:50.240 you know, the returns profiles are okay for what we like. 0:06:51.040 --> 0:06:55.120 The speed which we can move is also doable, all 0:06:55.160 --> 0:06:57.440 that kind of stuff. Is there anything ten times bigger? 0:06:58.120 --> 0:07:00.839 Like our ticket sizes ten times bigger, because that's the 0:07:00.839 --> 0:07:03.200 weight that we move in, Like our due diligence process 0:07:04.040 --> 0:07:08.640 and our timelines don't really reward doing things this small, 0:07:08.720 --> 0:07:10.480 Like we're going to do the same amount of diligence 0:07:10.520 --> 0:07:12.360 if we're acting in a half a billion dollar genre 0:07:12.400 --> 0:07:14.920 in a fifty million dollar job. So, speaking of deploying 0:07:14.960 --> 0:07:18.000 that capital, right, so we've talked a bit about how 0:07:18.080 --> 0:07:20.320 much it is or how much is going into this stuff, 0:07:20.360 --> 0:07:25.400 but like they're all being described as transition funds. Basically, now, 0:07:25.560 --> 0:07:28.480 what are they going to be spending that money on? Well, 0:07:28.480 --> 0:07:30.360 it's a little bit unclear. I have to say that 0:07:30.640 --> 0:07:35.120 given the general trajectory for a fund that size, it 0:07:35.200 --> 0:07:39.360 almost certainly be tilted towards asset investment, like it has 0:07:39.400 --> 0:07:43.040 to probably flow into assets and infrastructure at that size. 0:07:43.080 --> 0:07:46.360 You do see some general purpose venture funds that are 0:07:46.400 --> 0:07:49.240 in the multiple billions, but they would be probably doing 0:07:49.320 --> 0:07:52.680 later stage software investment. That might still happen, you know, 0:07:52.760 --> 0:07:56.080 fifty million dollar ticket sizes per institution in the fund 0:07:56.160 --> 0:07:59.360 raise at a time, but they're probably you know, they're 0:07:59.360 --> 0:08:03.120 probably not going into like angel round funding, friends and 0:08:03.160 --> 0:08:05.600 family rounds for things that have spun out of universities. 0:08:05.600 --> 0:08:08.160 They're almost certainly going to be going at that price 0:08:08.160 --> 0:08:10.440 for assets. But the caveat to that is that some 0:08:10.480 --> 0:08:12.400 of the funds have said that they are interested in 0:08:12.480 --> 0:08:15.360 looking relatively early on, like it is sort of an 0:08:15.400 --> 0:08:19.680 early stage growth, So providing the first walk around money 0:08:19.760 --> 0:08:22.280 for a big developer could be one. We definitely saw 0:08:22.320 --> 0:08:25.200 that happen back in the day. The question and we 0:08:25.240 --> 0:08:26.920 can talk about this a little bit later. It's interesting 0:08:27.000 --> 0:08:29.040 is what does that What does that imply for pricing 0:08:29.280 --> 0:08:31.840 of assets and pricing of companies when you have all 0:08:31.880 --> 0:08:37.079 that that capital chasing in something that's inherently smaller perhaps 0:08:37.160 --> 0:08:39.920 than the pool of available capital within a fund, just 0:08:39.920 --> 0:08:42.520 to be clear, for assets, you mean like projects like 0:08:42.559 --> 0:08:46.200 physical stuff things, Yes, you may not be buying them 0:08:46.200 --> 0:08:48.320 at these stage you're commissioning yet, but you're buying into 0:08:48.360 --> 0:08:50.840 a pool of physical assets as opposed to an acquisition 0:08:50.840 --> 0:08:54.360 that is primarily concerned with intellectual property broadly speaking, right, 0:08:54.640 --> 0:08:58.120 it's it's going towards property, plan and equipment if you want, 0:08:58.240 --> 0:09:01.080 rather than intellectual property. Right. Okay. One thing that I 0:09:01.080 --> 0:09:03.400 thought was really interesting looking at some of these announcements 0:09:03.559 --> 0:09:06.040 was I think it was the Blackrock announcement where they 0:09:06.040 --> 0:09:10.040 said that, you know, traditionally our previous two funds in 0:09:10.040 --> 0:09:13.880 this space have been solely on operational assets, but now 0:09:14.040 --> 0:09:18.439 we're going into construction assets and even just announced stuff 0:09:18.480 --> 0:09:22.320 announced projects, so they're going, you know, further further a field. 0:09:22.360 --> 0:09:24.240 I guess you could say. I thought that was pretty 0:09:24.480 --> 0:09:26.720 telling of where things are going. It's a sign I 0:09:26.720 --> 0:09:30.719 think of a sort of collective mass de risking, if 0:09:30.760 --> 0:09:33.600 you will. If an asset manager at that size is 0:09:33.640 --> 0:09:37.360 willing to start to go earlier and earlier in the 0:09:37.400 --> 0:09:41.960 development stage, that implies greater confidence written large across the 0:09:42.000 --> 0:09:44.840 sector and perhaps in the particular operators as well that 0:09:44.920 --> 0:09:47.480 they are investing in. So there's another sign of sence 0:09:47.480 --> 0:09:51.000 if if you're dealing with developers whom you've seen proved 0:09:51.080 --> 0:09:55.959 success in the past, go from dirt you know, from 0:09:55.960 --> 0:10:00.280 basically being a dirt farmer and dealing with permission and 0:10:00.440 --> 0:10:03.960 rights of way all the way towards commissioned assets, and 0:10:04.000 --> 0:10:06.640 you realize that you can invest on long that continuum 0:10:06.640 --> 0:10:09.720 if you will on an asset basis, then then maybe 0:10:09.760 --> 0:10:11.360 you are willing to do that. Also, they may find 0:10:11.360 --> 0:10:14.880 that pricing is more advantageous. Certainly, your spreads are going 0:10:14.880 --> 0:10:18.280 to compress the closer you get towards construction because the 0:10:18.400 --> 0:10:20.440 risks are in turn lower. And I mean this is 0:10:20.679 --> 0:10:25.160 this is kind of pretty familiar credit stuff. Maybe the 0:10:25.200 --> 0:10:29.240 cases that you're finding risk reward tolerance that is shifting 0:10:29.280 --> 0:10:32.240 towards the early stage because you want more reward and 0:10:32.240 --> 0:10:34.280 you're either more willing to take on the risk or 0:10:34.360 --> 0:10:37.400 you think that the risk itself is perhaps miss priced, right, 0:10:37.480 --> 0:10:40.560 so you're you're willing to go earlier, earlier into development 0:10:40.559 --> 0:10:42.200 stage because you see that that's where the value can 0:10:42.240 --> 0:10:46.440 be captured. You know, all these funds are raised from investors, 0:10:46.559 --> 0:10:50.320 who are the parties involved putting money into these funds. 0:10:50.320 --> 0:10:54.040 So the archetypal participants in any kind of infrastructural fundraising 0:10:54.040 --> 0:10:57.920 like this, and generally most of the institutions funding What 0:10:58.040 --> 0:11:01.959 happened this week are what we brought to be called institutions, 0:11:02.000 --> 0:11:05.679 and institutions in this case are endowments from a university, 0:11:05.800 --> 0:11:11.200 they are sovereign funds, they are pensions, retirement funds, things 0:11:11.200 --> 0:11:13.280 of that sort, and they're basically you're saying, well, we 0:11:13.280 --> 0:11:16.160 have two billion dollars of us as under management. That's 0:11:16.160 --> 0:11:17.800 the vote, you know, two tents of a percent of 0:11:17.840 --> 0:11:20.920 it to this fund this year, and maybe one percent 0:11:20.960 --> 0:11:23.280 of it overall in any given year to this kind 0:11:23.320 --> 0:11:26.560 of asset class. So that's pretty typical on the Ontario 0:11:26.640 --> 0:11:31.960 Teacher Teachers Pension Plan or the similar institutions in the 0:11:31.960 --> 0:11:34.559 state of California might be doing something like that. What's 0:11:34.880 --> 0:11:38.599 intriguing this time around is that you find other institutions 0:11:38.600 --> 0:11:41.360 that don't really we don't qualify as an institutional investor, 0:11:41.480 --> 0:11:46.119 and that would be things such as a Nike, Honeywell 0:11:46.880 --> 0:11:51.040 a corporation acting as unlimited partner, which is intriguing that 0:11:51.080 --> 0:11:53.760 doesn't often happen. You see companies of all sorts these 0:11:53.840 --> 0:11:57.200 days setting up their own venture wings, so they are 0:11:57.720 --> 0:12:01.240 sometimes they'll set up a completely separates wherein they have 0:12:01.920 --> 0:12:05.120 hived off and ring fence. They general partner that interacts 0:12:05.200 --> 0:12:07.640 with the rest of the company as a limited partner 0:12:07.640 --> 0:12:11.600 to the general partner, or they might be unlimited partner 0:12:11.600 --> 0:12:14.679 and somebody else's fund is a broader blanket or broader 0:12:14.760 --> 0:12:18.240 umbrella of of corporate venture capital. This is something very different. 0:12:18.240 --> 0:12:22.760 This is like corporate limited partnership in mostly assets based businesses. 0:12:22.840 --> 0:12:25.840 And I think we need to watch very closely to 0:12:25.960 --> 0:12:29.199 see what the intentionality is there over time. Part of it. 0:12:29.200 --> 0:12:30.800 I mean it could be purely financial. I mean it 0:12:30.840 --> 0:12:33.360 could be that the that the companies that are that 0:12:33.400 --> 0:12:37.520 are raising the funds are simply giving an expectation of 0:12:37.520 --> 0:12:40.120 returns that looks very very favorable and very very healthy. 0:12:40.240 --> 0:12:44.720 And as a treasurer, chief investment officer, chief financial officer 0:12:44.760 --> 0:12:48.880 of any big company, it simply pencils out ideally that's 0:12:48.880 --> 0:12:51.360 the case. Anyways, there's some component of that. You're not 0:12:51.400 --> 0:12:54.280 taking a flyer on it completely. But the rest is like, 0:12:54.760 --> 0:12:57.080 what's the additional gain is it? You know? Is it 0:12:57.120 --> 0:12:59.640 within the broader mandate of e s G of OF 0:12:59.679 --> 0:13:03.200 and its stitution. Is it part of its sustainability strategy? 0:13:03.360 --> 0:13:08.160 Is it part of its talent identification? It's thinking about 0:13:08.160 --> 0:13:10.199 its own investing. I mean that that has often been 0:13:10.240 --> 0:13:14.720 I think one of the complex dual mandates or triple 0:13:14.800 --> 0:13:20.120 mandates within venture capital that companies want to make money, 0:13:20.160 --> 0:13:25.520 identify deals, and identify partners at the same time, all 0:13:25.600 --> 0:13:29.560 equally well, which is I think difficult. One of them 0:13:29.600 --> 0:13:31.840 I feel like has to be sublimated to the others, 0:13:32.200 --> 0:13:35.600 or one rather has to be the first among the equals, 0:13:35.640 --> 0:13:38.559 the chief the chief goal, which personally I would always 0:13:38.559 --> 0:13:41.920 say should probably given the nature of investing as unimited partner, 0:13:42.000 --> 0:13:46.640 be money. But that's not necessarily the way that every 0:13:46.679 --> 0:13:48.920 everybody sees it. In fact, most of the times that 0:13:48.960 --> 0:13:51.120 I hear a corporate fund being described it, it's more 0:13:51.160 --> 0:13:53.520 along the lines of we're we're looking to achieve all 0:13:53.559 --> 0:13:56.400 of these goals at once. So in this case it's 0:13:56.400 --> 0:13:59.480 it's even it's even more derivative, I think, because you know, 0:13:59.520 --> 0:14:02.160 by by being a limited partner in a mostly asset 0:14:02.200 --> 0:14:05.960 and infrastructure bigated fund, you're not sort of getting a 0:14:06.000 --> 0:14:10.199 preview necessarily on a new technology or new market structure 0:14:10.280 --> 0:14:12.600 things like that, I think you would on suppliers, right, 0:14:12.760 --> 0:14:15.720 potentially suppliers and potential developers. Because some of these funds 0:14:15.720 --> 0:14:18.000 were saying, you know, hey, we're gonna be using this 0:14:18.080 --> 0:14:22.320 money for projects like assets and what they were calling 0:14:22.320 --> 0:14:25.240 it growth equity, right, so identifying the what would you 0:14:25.280 --> 0:14:28.120 call walking around money for for a developer. And so 0:14:28.160 --> 0:14:29.840 if I'm like a big corporate, you know, I need 0:14:29.880 --> 0:14:32.160 a developer and to to acquire later, maybe this is 0:14:32.160 --> 0:14:34.760 a good chance to get them up to speed potentially. 0:14:34.800 --> 0:14:36.560 So and so I actually I would actually like to 0:14:36.640 --> 0:14:39.280 see how this plays out and how it's proven out. 0:14:39.360 --> 0:14:43.160 I'm not to say do things one how the corporations 0:14:43.640 --> 0:14:49.960 themselves describe the the initiative here like the prime mover 0:14:50.080 --> 0:14:52.440 of their decision making, and to what they actually do 0:14:52.560 --> 0:14:55.040 over time, and that may be that may be a 0:14:55.080 --> 0:14:57.440 bit of a bit of a data challenge over time, 0:14:57.560 --> 0:15:00.440 because we don't necessarily see any of these things, right, 0:15:00.520 --> 0:15:04.440 they're unlimited partners within a general partnership structure that is 0:15:04.480 --> 0:15:07.640 itself a private entity. And then we may not find 0:15:07.640 --> 0:15:09.560 out a lot, but I think we should. We should 0:15:09.600 --> 0:15:12.320 interrogate this as much as possible because it's actually it's 0:15:12.360 --> 0:15:15.040 fascinating to see, and I think it's very important to 0:15:15.040 --> 0:15:19.240 determine where future pools of capital might go, how how 0:15:19.280 --> 0:15:24.440 how companies themselves might disrupt this this otherwise quite traditional 0:15:24.440 --> 0:15:26.720 flow of capital through the funnel, if you will. But 0:15:26.800 --> 0:15:29.360 let's step back a little bit. Why now, So what 0:15:29.520 --> 0:15:32.600 is going on right now? What is the world telling 0:15:32.680 --> 0:15:34.920 us to say that these funds should be raised at 0:15:34.920 --> 0:15:39.680 this moment? One element is probably policy signal, right, betting 0:15:39.680 --> 0:15:42.920 along the vector that eventually every major jurisdiction in the 0:15:42.960 --> 0:15:46.040 world will have some sort of net zero target. And 0:15:46.080 --> 0:15:48.480 that's when I say major jurisdiction, I think about that 0:15:49.440 --> 0:15:53.600 on the kind of molecul or carbon dioxide basis. Okay, 0:15:53.640 --> 0:15:56.400 every major emitter, if you will, we will have a 0:15:56.840 --> 0:16:03.480 will have some mandate to insofar as possible, decarbonized as 0:16:03.560 --> 0:16:07.240 much as possible. I think that's one. Two. I feel 0:16:07.240 --> 0:16:12.360 like there's there's probably a general awareness in a very 0:16:12.400 --> 0:16:17.200 good way of the competitive or out competing economics these days, 0:16:17.200 --> 0:16:20.760 of doing cleaner types of investment on the assets side, 0:16:20.760 --> 0:16:23.120 and maybe even further upstream of that, you know, investing 0:16:23.120 --> 0:16:26.080 in technology companies, that there's potential there. So you're saying, 0:16:26.280 --> 0:16:29.600 just the economics just makes sense, and that's being recognized. Yes, 0:16:29.720 --> 0:16:32.160 that's being that's being recognized, it's being and it's also 0:16:32.200 --> 0:16:34.120 been priced. And I think on the flip side of 0:16:34.160 --> 0:16:37.600 that is that the the tail risk slash stranded asset 0:16:37.720 --> 0:16:41.800 risks associated with other types of investing may become more apparent, right, 0:16:42.480 --> 0:16:45.760 so that risk premium is probably going up for some 0:16:45.840 --> 0:16:49.160 other types of investing on the other side of the 0:16:49.200 --> 0:16:51.240 carbon ledger, if you will. Now, that doesn't mean that 0:16:51.280 --> 0:16:53.960 those investments don't happen. They just maybe become more specialized. 0:16:54.480 --> 0:16:57.920 They become the domain of more specialized not so much 0:16:57.920 --> 0:17:00.600 general funds. We go back to me ten a lot, 0:17:00.640 --> 0:17:03.680 I guess, but we kept seeing the boutique banks doing 0:17:03.680 --> 0:17:07.280 these types of deals, right, and maybe maybe we're not 0:17:07.320 --> 0:17:09.560 talking banks, but maybe it flips, right, so maybe it's 0:17:09.600 --> 0:17:13.360 now the boutiques doing the coal plant. Yes, I would say, 0:17:13.400 --> 0:17:17.239 like and actually that is absolutely the case already. If 0:17:17.280 --> 0:17:18.440 you want to do it, call if you want to 0:17:18.440 --> 0:17:20.280 do a coal plant investment in Europe and North America, 0:17:20.280 --> 0:17:23.639 you are almost certainly doing it with at the highest level, 0:17:24.280 --> 0:17:27.640 maybe a special situations group within within an established bank, 0:17:27.720 --> 0:17:31.359 though honestly I doubt it. It's much more likely that 0:17:31.400 --> 0:17:34.560 you're dealing with a specialty private equity fund then looks 0:17:34.560 --> 0:17:37.119 at that type of asset, that type of market, and 0:17:37.160 --> 0:17:41.399 also looks at specific instruments within that there might be like, great, 0:17:41.800 --> 0:17:45.080 we'll take you to our energy Distressed Debt fund, you know, 0:17:45.160 --> 0:17:47.800 as opposed as opposed to our seven and a half 0:17:47.880 --> 0:17:52.200 billion dollar soft clothes or seven billion dollars soft clothes 0:17:52.240 --> 0:17:56.440 on our climate transition fund. I think there's just a zeitgeist, 0:17:56.520 --> 0:17:59.480 the element not to sound too hand wavy about it, 0:17:59.520 --> 0:18:02.280 but there is is, you know, a sense that there 0:18:02.400 --> 0:18:07.719 is a more categorical imperative to decarbonize in more places 0:18:07.760 --> 0:18:10.520 and in more ways. And I think a sense too 0:18:10.840 --> 0:18:14.200 that I'm interested to see how this reflects within climate 0:18:14.200 --> 0:18:17.080 transition over time, that it is about more than the 0:18:17.119 --> 0:18:19.800 electron that it that it, that it starts to go 0:18:19.880 --> 0:18:23.520 into things that are about chemistry and not just about 0:18:23.600 --> 0:18:26.200 physics so to speak, you know, that start to get 0:18:26.200 --> 0:18:30.560 into the difficulty decarbonized spaces that we know very well 0:18:30.600 --> 0:18:33.800 we'll take tens of trillions of dollars, but also maybe 0:18:33.800 --> 0:18:36.320 the sorts of tens of trillions of dollars that online 0:18:36.400 --> 0:18:39.520 with the sorts of things that people already invest tens 0:18:39.520 --> 0:18:44.480 of trillions of dollars in two pipelines, plants for transforming molecules, 0:18:45.080 --> 0:18:48.880 supply networks, things of that sort that better online with 0:18:49.200 --> 0:18:52.840 the expectation of investing, you know, a billion dollars at 0:18:52.840 --> 0:18:55.359 a time. Do you think this is the start or 0:18:55.400 --> 0:18:58.520 do you think this is like, you know, a culmination 0:18:58.760 --> 0:19:01.240 or something like that, Like, what's would we expect going forward? 0:19:01.680 --> 0:19:05.040 It's a it's a good question, Um. I I expected 0:19:05.119 --> 0:19:07.440 to be sort of still within a continuum. I don't 0:19:07.480 --> 0:19:09.440 know when we'll see a high water mark on it. 0:19:09.680 --> 0:19:11.600 We will probably look at and be like, Okay, that's 0:19:11.640 --> 0:19:14.840 it this, you know, this seventeen billion dollar fund that 0:19:14.960 --> 0:19:20.159 was closed in six weeks specifically around I don't know. 0:19:20.640 --> 0:19:24.760 Green hydrogen production in one in one market is probably 0:19:24.800 --> 0:19:26.520 the kind of thing of it that seems kind of 0:19:26.560 --> 0:19:29.480 high water market to me. But I don't know that 0:19:29.520 --> 0:19:34.320 we're anywhere close to that yet, So I would still 0:19:34.359 --> 0:19:36.400 say that it's a continue There's still an awful lot 0:19:36.400 --> 0:19:40.399 of institutional money waiting to go. And this is a 0:19:40.480 --> 0:19:42.959 neutral statement, but there there does tend to be a 0:19:42.960 --> 0:19:46.720 lot of trend following and going along. Like these institutions 0:19:46.720 --> 0:19:48.400 I would say that are doing these fund raises are 0:19:48.400 --> 0:19:54.320 really really apex institutions within alternative with an alternative investment, 0:19:55.000 --> 0:20:00.360 and I think that implies if they're so oversubscribed. If 0:20:00.359 --> 0:20:03.200 they have so much interest from so many different parties, 0:20:03.840 --> 0:20:08.240 it implies a much greater total addressable market to shake 0:20:08.280 --> 0:20:11.720 out over time and perhaps come down a little bit 0:20:11.800 --> 0:20:15.119 in fun size, specialize on a little bit more. I 0:20:15.119 --> 0:20:18.000 think this would be entirely healthy if that was the case, right, 0:20:18.040 --> 0:20:19.919 I mean I I think it's possible we get some 0:20:20.040 --> 0:20:23.960 larger funds beyond this point. It's also possible we get 0:20:24.000 --> 0:20:28.680 we get a thousand flowers blooming of more specialized funds 0:20:29.480 --> 0:20:34.080 with similar enthusiasm. So like the whoever Canadian wind fund, 0:20:34.680 --> 0:20:36.920 Yeah I'm or yeah, I'm raising the mid market green 0:20:37.000 --> 0:20:41.560 hydrogen fund for the Benelux. That actually doesn't sound should 0:20:41.640 --> 0:20:45.240 not sound rather too specific in that sense, given the 0:20:45.280 --> 0:20:48.040 scale of what might be happening right where things come 0:20:48.080 --> 0:20:49.840 in with a much when things come in with a 0:20:49.880 --> 0:20:54.960 tight targeting based on appetite, thun limited partners, specific expertise 0:20:54.960 --> 0:20:57.600 and technology, all that kind of stuff I feel in 0:20:57.640 --> 0:20:59.280 tells me if I can give my my my slight 0:20:59.320 --> 0:21:01.760 take for a second, the NEO, the new energy outlook 0:21:01.800 --> 0:21:03.960 that just came out last week from benf Right, we 0:21:04.080 --> 0:21:08.720 put investment in there required to achieve net zero or 0:21:08.760 --> 0:21:13.760 between our different scenarios out one seventy three trillion in 0:21:13.800 --> 0:21:16.520 the next thirty years. And so I've penciled that out 0:21:16.880 --> 0:21:20.959 and we put capacity you know, for wind and solar 0:21:21.040 --> 0:21:23.800 only like like not even talking about hydrogen and things 0:21:23.800 --> 0:21:27.240 like that, but wind and solar only at eight now 0:21:27.600 --> 0:21:32.560 of capacity and what in right, And so if you 0:21:32.600 --> 0:21:35.560 just use average project sizes, that gives you three hundred 0:21:35.600 --> 0:21:38.359 and sixty six thousand new projects that have to be 0:21:38.359 --> 0:21:42.120 built the next thirty years. And so to me, yeah, 0:21:42.160 --> 0:21:44.840 this might be a culmination or a high water mark 0:21:44.920 --> 0:21:48.040 for this type of fund, but there's still a drop 0:21:48.040 --> 0:21:51.440 in the bucket in comparison to what kind of could 0:21:51.440 --> 0:21:54.680 be expected to be built in time. The headroom within 0:21:54.760 --> 0:21:58.080 the markets in order to reach a net zero energy 0:21:58.119 --> 0:22:02.919 system is so huge that there's no chance on a 0:22:03.000 --> 0:22:06.560