Takeaways

• Generation Investment Management has secured more than $1 billion for its second Sustainable Private Equity Fund and related co-investment vehicles.
• The fund will invest in businesses that help industries improve sustainability through technology, software, and operational systems.
• Initial investments include Octopus Energy, Kraken Technologies, and IFS, reflecting growing investor interest in climate-focused infrastructure.

Generation Investment Management has completed the fundraising for its second Sustainable Private Equity Fund, securing more than $1 billion alongside related co-investment vehicles. The latest fund marks another milestone in the firm's sustainable investing strategy, which focuses on businesses capable of driving environmental progress across entire industries rather than through individual projects.

Known as Sustainable Private Equity Fund II (SPEF II), the fund will invest in companies that form the backbone of critical sectors. These businesses provide the software, infrastructure, data platforms, and operational systems that help industries become more efficient while supporting long-term climate transition goals.

Read More: Socially Responsible Investing: Strategies, Definitions, and SRI Explained

The new fund attracted backing from a broad range of institutional investors across several regions, with existing investors also increasing their commitments. Generation said the strategy allows it to acquire either minority or majority stakes in businesses that combine strong commercial potential with measurable sustainability impact.

Tom Hodges, Co-Head of Private Equity at Generation Investment Management, said the firm's investment philosophy is based on the belief that lasting sustainability improvements happen within the systems that industries rely on every day.

According to Hodges, businesses managing data, workflows, distribution networks, and operational processes are well positioned to deliver sustainability at scale. He added that SPEF II aims to partner with companies whose technologies can embed sustainability into the core operations of major industries.

The approach reflects a wider trend in the investment market, where capital is increasingly flowing toward businesses that support the transition to a lower-carbon economy. Rather than concentrating solely on renewable energy assets, investors are looking for companies whose products and services can help entire sectors improve efficiency, reduce emissions, and modernize operations.

Generation has already deployed capital from the Generation Sustainable Private Equity Fund into three companies: Octopus Energy, Kraken Technologies, and IFS.

Octopus Energy has grown into one of the UK's largest energy suppliers and now operates in more than 25 countries. Its business spans renewable power generation, energy retail, consumer services, and energy transition solutions.

Kraken Technologies, originally developed within Octopus Energy, provides digital infrastructure that helps energy providers optimize electricity use, improve customer service, and support cleaner energy systems. The platform now serves more than 70 million residential and business accounts worldwide.

The fund has also invested in IFS, an enterprise software provider serving industries such as manufacturing and construction. Generation believes that wider adoption of IFS technology could help reduce global carbon emissions by improving asset management, maintenance planning, resource efficiency, and operational performance across asset-intensive sectors.

The successful close of SPEF II highlights how sustainability investing continues to evolve. Investors are increasingly seeking businesses that can deliver both financial returns and practical climate solutions through technologies that improve the way industries operate.

Also Read: The Top 3 Visible Benefits of ESG Investing

As companies face growing pressure to meet environmental goals while maintaining profitability, funds such as Generation's are positioning themselves to back businesses that can make sustainability a routine part of everyday operations, helping industries decarbonize while supporting long-term economic growth.

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Source: ESG NEWS