Blackstone closes on $7.1bn energy transition fund

Blackstone Credit announced Thursday the final close of its energy transition credit fund, on its $7.1 billion hard-cap, making it the largest energy transition private credit fund ever.

Blackstone Green Private Credit Fund III (BGREEN III) was launched in July 2022, and surpassed its initial target of $6 billion, according to a person familiar with the matter.  

“The energy transition is impacting large sectors of the economy and is resulting in a growing need for efficient private capital. We believe our experience and scale will enable Blackstone Credit to deliver flexible solutions to companies during this historic transition and generate compelling returns for our investors” said Robert Horn, global head of Blackstone’s sustainable resources platform, in a statement. 

As PDI reported in January, areas of interest for BGREEN III include residential solar and home efficiency, renewable electricity generation, decarbonised transportation, sustainability-linked loans and energy infrastructure.  

Its precursor fund, launched in January 2018 with a target of $5 billion closed in June 2019 at $4.5 billion.   

According to PDI research, the first close of BGREEN III, in December 2022, was on $4.4 billion. A second close, in June, brought the number up to $5.94 billion.  

The strategy looks to subordinated corporate debt. It has a very broad geographic focus, including North America, Western Europe, and Eastern/Central Europe. 

PDI research indicates that BGREEN III has commitments from a number of public pension funds, including  $350 million from the New York State Common Retirement Fund, and $144 million from the Border to Coast Pensions Partnership in the United Kingdom.  

BGREEN III is managed by Blackstone Credit’s sustainable resources platform, which looks for opportunities to invest in the world’s ongoing transition toward a renewables-based energy system. Last year Blackstone announced that it was looking for opportunities to invest as much as $100 billion in transition and climate-change projects.  

The platform has 40 professionals at work globally, investing in the whole credit spectrum: investment grade credit, non-investment grade, preferred and convertible securities, the statement said.    

Blackstone only recently passed the $1 trillion AUM point. Its credit and insurance segment has an AUM of $295 billion.  

On the equity side, Blackstone continues to raise money on another green fund, a buyout fund named Blackstone Energy Transition Partners IV, launched in June 2022.