Mitsubishi Launches $1bn Fund for Green Startups

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by KnowESG
KnowESG_Sustainable fund
Image courtesy of https://asia.nikkei.com/

Japanese trading house Mitsubishi Corp., together with MUFG bank and others, will launch one of the largest decarbonisation funds in Japan.

The fund will invest a total of $1 billion in startup companies with promising technologies in areas such as floating offshore wind turbines and sustainable aviation fuel.

The fund will look at mainly European and U.S. startups that are leading in such areas. The trading house also hopes to facilitate collaboration between those tech startups and Japanese and other Asian companies via its global business network and to promote decarbonisation efforts among them.

Mitsubishi will soon create the Marunouchi Climate Tech Growth Fund through a management company jointly established with MUFG bank and South Korean private equity fund Pavilion Private Equity. Mitsubishi will invest several hundred million dollars in the fund, while Mitsubishi Heavy Industries and other investors will be invited to take part as well.

The size of the fund is to be expanded to $1 billion by April next year and will be one of the largest funds led by an operating company in Japan. Individual investments are expected to range between $20 million and $100 million per startup, with around 20 investments to be made by April 2029.

Mitsubishi's stake in the management company is over 90%, and it will take the lead in selecting investments. The fund will focus on renewable energy, next-generation fuels, storage batteries and other areas. It will mainly invest in startup projects that are yet to be commercialised.

According to one estimate, to achieve net-zero CO2 emissions by 2050, an average annual investment of $2 trillion will be required from 2022 to 2025, rising $4 trillion per year from 2026 to 2030. In addition to investing in floating offshore wind turbines and technologies that directly capture carbon dioxide from the air, Mitsubishi will support startups' commercialisation efforts by providing opportunities for collaboration with investing companies.

Mitsubishi plans to put 2 trillion yen ($15 billion) into decarbonisation projects by fiscal 2030. It invested $100 million in 2022, with the money going to Breakthrough Energy Catalyst, Microsoft co-founder Bill Gates' decarbonisation fund.

Several decarbonisation funds have been launched around the world. Investment funds affiliated with the SoftBank Group and Saudi Arabia's state-run oil giant Saudi Aramco have invested in Swiss company Energy Vault, which utilises "gravity storage," converting electricity into potential energy to store it. The investment more than doubled the Swiss company's corporate value and spurred it to go public in 2022.

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Source: Nikkei Asia

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