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Laxman Pai, Opalesque Asia: Private equity picks up oil, gas, and coal assets as listed companies let go of fossil fuel assets amidst growing pressure from shareholders and investors.
But this may change, says Fitch Ratings. The rating agency pointed out in a report that, PE may be starting to play a bigger role in the global transition to a low-carbon economy.
"There are signs of a shift in private equity energy investments that have focused heavily over the past decade on fossil fuel assets, such as thermal coal or oil and gas infrastructure. We expect global private equity assets under management to more than double by 2025, so the pace of adoption of climate considerations by the sector could have wider repercussions for low-carbon transition," said the research report.
Private equity firms have invested heavily in fossil fuel assets divested by public companies and financial institutions based on expected returns, including several large deals in India and the US. The financing of fossil fuels has been resilient despite the industry downturn over the past year and large losses in US shale in recent years.
At the same time, many limited partners such as pension funds are pushing for wider integration of environmental, social, and governance principles in private equity, with over 80% of European assets affected by such policies. Fitch expects Blackstone's recently announced investment emissions goal to be replicated by industry peers.
Moreover, private e...................... To view our full article Click here
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