## Ara Partners Launches $800M Fund to Repurpose Industrial Assets for a Low-Carbon Future
Climate tech startups developing industrial-scale hardware often face a critical funding gap: they’re too big for venture capital, but require substantial capital beyond the reach of typical seed rounds. Infrastructure funds could fill this void, but many have been hesitant to invest in climate tech. Ara Partners, a private equity firm, sees this as an opportunity.
The firm recently announced an $800 million infrastructure fund specifically targeting the reduction of carbon emissions in traditionally difficult-to-decarbonize industrial sectors. The fund, exceeding its initial $500 million target due to strong support from both existing and new investors, including pension funds, insurance companies, endowments, foundations, and sovereign wealth funds globally, signals growing confidence in the economic viability of climate tech.
Ara Partners’ strategy focuses on repurposing existing industrial assets for new, low-carbon developments. The fund has already allocated capital to three ventures, including an Ireland-based household organic waste recycler and a biofuel terminal developer. This approach not only reduces emissions but also revitalizes existing infrastructure, offering a potentially more sustainable and economically attractive alternative to building new facilities from scratch.
This significant fundraise comes at a crucial time. While political landscapes surrounding decarbonization efforts may fluctuate, the underlying economics are becoming increasingly clear. The costs of low- and zero-carbon technologies have decreased considerably in recent years, making them increasingly competitive with traditional, carbon-intensive methods.
Ara Partners has a history of successful investments in this space. For instance, their previous investment in Divert showcases the potential for environmental and financial returns. Divert tackles grocery store food waste by donating edible food and converting the inedible portion into biogas for sale or on-site energy generation, a significantly better option than sending it to landfills to generate methane.
Ara Partners is expected to announce its fourth investment under this new strategy shortly, further demonstrating its commitment to driving decarbonization within the industrial sector.
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