Introduction to the 1GT Fund with Vikram Raju
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Insight Video
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Introduction to the 1GT Fund with Vikram Raju
Introduction to the 1GT Fund with Vikram Raju
Introduction to the 1GT Fund with Vikram Raju |
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From a private equity model perspective, it is pretty hard to ignore the climate lens. From margins to growth opportunities to exit valuations, climate plays a very important role in every step of the way, increasingly so.
Hi. I'm Vikram Raju. I head climate investing at Morgan Stanley's private markets team, and I'm the portfolio manager for our newly launched 1GT Fund.
1GT stands for one gigaton, which is the amount of impact we hope to create by reducing or avoiding the emissions of a gigaton of carbon dioxide from the atmosphere.
We do this by investing in companies, growth-stage company that are delivering products and services that have a marketplace, and are compelling because they're doing something that is cheaper, faster, lighter, or better. But built into their business model is the environmental impact that collectively adds up to the avoidance of a gigaton of carbon over a period of time .
These innovations are necessary if we are to achieve net zero as an ecosystem by 2050. There are two reasons to look at 1GT. One is from a pure private equity lens. Everything that is necessary for a good private equity investment, I mean, we're talking about margins, we're talking about growth opportunities, we're talking about assets resiliency, and we're talking about exit market valuations, all of these are intrinsically linked to having a strong climate focus.
And I would argue that if you do not have the climate focus, you're unlikely to achieve these high, compelling private equity returns.
From an impact involving perspective, we're also changing the paradigm. The traditional model of impact investing is when we invest money and report on impact to our investors.
We're turning it on its head by saying, "We'll tell you the amount of impact we're creating. It is one gigaton of carbon." And we're tying our carried interest to the achievement of this goal. And the measurement of this is completely independent, which is also a market-leading innovation. clima
So you as investors know how much we're trying to create, what the impact is, how we get rewarded or penalized for it, and who measures it.
I've been investing in climate since 2011, first as part of the World Bank, and then for the last eight years here at Morgan Stanley, in collaboration with our Institute of Sustainable Investing .
The resources that our global sustainable finance group have in everything from world-class climate risk modelers to carbon-pricing experts, are a tremendous resource for our team, but also for our portfolio companies, who are growth-stage companies, and therefore typically do not have access to these kind of global, high-quality resources.
But that's the power of the platform. And that's what makes us distinctive when we engage with these companies.
We believe that the 1GT Fund creates a new model to develop really compelling financial returns, while also tackling the most important environmental issue of our time.
I'm Vikram Raju, thank you for watching.
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