Morgan Stanley Investment Management (MSIM) announced today that it has raised $500 million at the first close of its climate private equity strategy, 1GT.

Launched in November 2022, 1GT is a new growth-oriented private equity platform aimed at investing in climate solutions companies that will eliminate 1 billion tons (1 gigaton) of CO2 emissions from the date of investment through 2050.

According to Morgan Stanley, investors in the strategy include public and private pension funds and an insurance company in the Nordic region, Germany and the UK.

David N. Miller, Head of Morgan Stanley Private Credit and Equity, said:

“We are extremely pleased by the strong investor support for 1GT. This strategy provides our clients an innovative solution that seeks to address time-critical climate issues and brings Morgan Stanley’s considerable resources to portfolio companies to help accelerate climate impact and earnings growth to create more exit optionality.”

1GT, led by Vikram Raju, Head of Climate Investing at MSIM, invests primarily in North American and European private companies that provide products and services that enable meaningful improvements in carbon footprints, and can deliver a meaningful financial return, across themes including mobility, power, sustainable food and agriculture, and circular economy.

At the launch of the strategy, MSIM announced that half of the 1GT team’s incentive compensation will be tied to the achievement of the platform’s climate objectives.

Investments to date include supply chain insights and risk analytics company Everstream Analytics. 1GT led Everstream’s $50 million capital raise in April 2023 aimed at driving the company’s innovation in operational risk and ESG performance to accelerate supply chain sustainability.

1GT is classified as Article 9 under the EU’s SFDR regulation, which requires sustainable investment or carbon emissions reduction as an objective.

Raju said:

“Reaching our halfway goal is an important milestone. Our anchor investors have demonstrated a strong level of climate ambition by backing 1GT with its twin goals of investing in compelling high-growth companies in Europe and North America while aiming to deliver transformational climate impact at the gigaton level. Tying the team’s incentive compensation to both of the 1GT goals recognizes this in equal measure. We have begun executing on our pipeline at a very opportune phase in the growth equity market.”