Lightsmith Raises $186 Million for First Private Equity Fund Focused on Climate Resilience & Adaptation
Private equity investor Lightsmith Group announced that it has raised commitments of $186 million for the final closing of the Lightsmith Climate Resilience fund, investing in growth-stage technology companies that address the effects of climate change.
According to sustainability-focused analysis and advisory organization Climate Policy Initiative, CPI, Lightsmith Climate Resilience is the first private equity fund focused on climate resilience. As the frequency and severity of extreme climate events increases, the need for adaptation and resilience initiatives and financing is growing as well, yet climate adaptation has not yet emerged as a significant focus area for sustainable finance or investment.
Lightsmith Managing Director & Co-Founder Jay Koh said that climate resilience technologies represent an “overlooked, multi-billion dollar investment opportunity that will just keep growing.” Lightsmith estimates the total addressable market for growth-stage companies whose technologies can address the growing physical impacts of climate change to be $170 billion today, According to Koh, “increasing drought, agriculture stress, and supply chain disruption linked to climate change will drive demand for data and analytics to understand those risks and for the solutions to manage them.”
Sanjay Wagle, Lightsmith Managing Director & Co-Founder, added:
“As investors, we know very little about the future with any certainty. One thing we do know is that companies that have smart solutions to respond to climate change will be increasingly in demand. Investing in climate resilience solutions can deliver both financial returns and real benefits to companies, communities, and individuals. Climate resilience technology is an opportunity for investors and for us all.”
The new fund will focus on six technology areas including water efficiency and smart water management, resilient food systems, agricultural analytics, geospatial intelligence, supply chain analytics, and catastrophe risk modeling and risk transfer. The fund will help scale up companies, applying their technologies to help businesses and communities adapt to climate change, and through international expansion, particularly in emerging markets, and by partnering with the firm’s network of companies and governments.
Richard Kauffman, Chairman of the investment committee for Lightsmith Climate Resilience, said:
“Lightsmith Climate Resilience is the first private equity fund to focus on investing in solutions to the effects of climate change. Lightsmith has brought together a team with a unique combination of experience in direct investment and climate change and has secured the commitment of leading global investors to invest in climate resilience.”
With a commitment of $46 million, the Green Climate Fund (GCF) is the largest investor in Lightsmith Climate Resilience. Additional investors in the fund include PNC Insurance Group, The Rockefeller Foundation, Kinneret Group, Caprock Impact Partners, European Investment Bank, Asian Infrastructure Investment Bank, KfW on behalf of the German Ministry for Economic Cooperation and Development, Nordic Development Fund, and the Government of Luxembourg.
Yannick Glemarec, Executive Director of the Green Climate Fund, said:
“By committing to the first private sector investment fund for adaptation, GCF’s catalytic investment will accelerate the transfer of private sector technologies to developing countries, boosting climate adaptation efforts and resilience, while promoting a green recovery from the COVID-19 pandemic. It is a game changer and a strong example of the role the private sector can play in mobilizing adaptation finance and delivering innovative solutions to complex climate challenges.”