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Climate Investing Across Private Markets: A Return-Focused Perspective

  • Strategy insight

January 30, 2025 | 10 min read

Till Burges

Managing Director

Holland Davis

Principal

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Global investment in the energy transition has risen from $200 billion in 2004 to $1.8 trillion in 2023.1 This substantial growth has brought the climate2 investment landscape to an important inflection point, where it now offers investors a compelling market opportunity from both a scale and risk-return perspective.
More companies can deploy climate technologies and reduce emissions without sacrificing profitability, largely due to lower costs and improved functionality across a wide range of climate-related technologies including solar, battery storage, and electric vehicles (EVs). This expanding universe of attractive business models and more experienced general partners (GPs) are combining to present dynamic opportunities for investors across private markets strategies to participate in the climate market without foregoing investment discipline.
Below we examine the evolving climate investment ecosystem, explore how recent developments have generated positive support for the long-term growth potential for companies and investors within the overall climate segment, and consider ways allocators can fine-tune their portfolios to capitalize on this opportunity while optimizing risk-adjusted returns.

Climate solutions span a range of industries and private markets strategies

Reaching international, state, and corporate climate goals and emissions targets will require major investment and repositioning of many facets of the global economy. While the energy transition is bringing change across many sectors, one of the largest segments by capital investment is power and energy, specifically focused on building a renewable power infrastructure.3 Going forward, repositioning legacy assets will comprise a larger portion of the climate investment landscape and will impact sectors including transportation, agriculture, industrial production, and technology.

We believe the private equity value creation playbook is well-suited to support both the transition of legacy assets and the development of innovative new solutions. Investors are partnering with corporations and municipalities through a variety of decarbonization strategies to drive the operational improvements required to increase the efficiency of legacy assets and develop new technologies to spur state-of-the-art innovation.

Private markets strategies offering compelling climate-related investment opportunities include:

  • Infrastructure, which continues to lead the massive investment in decarbonized energy, power, and transportation.
  • Buyout investments in companies focused on decreasing climate emissions and enabling a low-carbon economy by reducing waste, managing resources, or creating more sustainable supply chains.
  • Venture capital and growth equity investments funding new climate solutions across many different sectors and end-markets, including initiatives such as better energy management, carbon capture, and scaling the circular economy.
  • Private credit, which can provide working capital for equipment manufacturing companies related to the energy transition and bridge financing for companies supporting the transition phase—such as renewable energy developers.

A more mature climate GP landscape has emerged

Over the last several years, many private markets managers focused on climate and energy transition have developed meaningful track records. Concurrently, climate-related investing has become an increasing portion in the portfolios of experienced venture capital, growth equity, buyout, and infrastructure managers, with many setting up dedicated climate and energy transition strategies. There is also a clear trend of infrastructure and energy GPs shifting their focus from legacy business models within conventional power, oil, and gas production, toward climate, energy transition, and sustainability-oriented investments. This pivot toward climate-related investing across a variety of GPs is primarily being propelled by capital markets demand drivers that support the potential for significant capital appreciation.

For investors, the result is a larger, more diverse, and better experienced GP landscape where investors can now implement a multi-manager investment strategy to create a return-driven private markets climate portfolio without sacrificing investment discipline. What was once a niche segment has been transformed into a robust private markets opportunity set with over 200 climate specialist GPs having distinct strategies across asset classes, market capitalizations, and geographies.4

Climate and energy transition specialist GP landscape

Source: HarbourVest proprietary market sizing estimates for closed-end, commingled private equity and infrastructure climate-focused funds with an OECD primary focus as of November 15, 2024. Bubble size represents approximate market size by capitalization. Analysis only includes GPs that have institutional quality offerings as determined by HarbourVest investment teams and excludes open-end funds, fund of funds, special purpose vehicles, and co-investment vehicles. Number of distinct GP fund strategies is based on the number of different strategies offered by a specific GP and not the number of individual funds offered by a GP.

Portfolio implementation and construction considerations

Given the dynamic and more mature state of the climate and energy transition landscape, more investors are actively allocating to the growing opportunity set. But optimizing how those allocations are made is equally important. The following considerations can potentially help investors build diversified portfolios that enhance their climate allocations and returns.

Climate's vast opportunity set is best captured through broad, cross-strategy investing

The climate opportunity spans private markets asset classes and climate-related business models are likely to continue merging across strategies. For example, growth equity, buyout, and infrastructure GPs alike are investing in EV charging platforms at different points of their development. As a result, investing in this market effectively requires deep, cross-strategy market coverage from sourcing and investment diligence to portfolio construction in an effort to limit blind spots, enhance market coverage, and improve risk-adjusted returns. To manage portfolio-level risk within a climate allocation, it is important for investors to diversify exposures across company sizes, geographies, business models, and end-markets as well as across technologies (e.g., wind, solar, batteries), demand drivers (e.g., power prices, development activity), and value creation strategies (e.g., M&A, organic growth).

Engaging a cross-functional team allows investors to effectively deploy capital at the intersection of private equity and infrastructure business models. We believe this approach can help uncover compelling risk-adjusted returns by avoiding early technology commercialization risk and potentially driving outperformance through superior execution of value creation plans. These segments are reflected in core-plus/value-add infrastructure and growth/buyout strategies. While historical performance is not always indicative of future results, it is notable that growth/buyout strategies are offering more upside potential than venture and value-add strategies are providing more downside protection than core infrastructure when using quartile ranges as a proxy for relative risk and return.5

Climate-focused net IRR by fund strategy (2013 - 2022 vintages)

Source: Preqin and HarbourVest proprietary data as of June 30, 2024. Includes closed-end, commingled private equity and infrastructure climate-focused funds with an OECD primary focus. Core-plus and value-add strategies and growth and buyout strategies are bucketed together as the line between these strategies is inconsistent. HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, or experience. Past performance is not a reliable indicator of future results.

Tap into deal flow from specialists and generalists across transaction types

We have seen strong climate deal flow from a mix of specialist and generalist managers. While the track record suggests highly specialized managers with sophisticated market knowledge and value creation tools outperform in the dynamic climate market, we also believe there is a strong co-investment deal flow and opportunity from more generalist managers. Comparing the performance of climate infrastructure specialist strategies to generalist infrastructure strategies, we see over 500 basis points of outperformance for top quartile specialist strategies. However, this outperformance entirely erodes for median performing funds, with generalist strategies achieving roughly equivalent performance relative to specialists.6

Investors should also consider diversifying their climate portfolios by transaction types ranging from primaries and co-investments to GP-led secondary transactions, as each provides distinct fee structures, income, and return realization that can help optimize portfolio returns. For example, investors can begin by committing on a primary basis to top-tier specialists while co-investing alongside specialist and generalist GPs with climate deal flow. Adding direct co-investments and GP-led secondary transactions allows investors to potentially reduce overall economics, enhance diversification, increase exposure to strategic objectives, and improve diligence and market coverage, while accessing market leading companies outside of the M&A process.

This diversified approach to constructing portfolios requires significant sourcing and underwriting resources along with teams that can provide global market coverage. Given the scarcity and uniqueness of certain portfolio companies in the climate and energy transition landscape, some of the leading deals cannot be accessed through typical M&A channels. Some of the largest private climate companies have grown through inside rounds and continuation vehicles as GPs seek to hold on to their market leading assets for longer given the significant value placed on talented management teams and actionable development pipelines to drive growth (“platform value”).

Don't forget the middle market

Investors able to access top tier middle-market funds and deals have been able to generate return alpha given both the structural nuances and the less competitive nature of the segment relative to large cap.7 Illustrating the importance of the middle market for climate investors specifically, over 90% of power assets in the US have an enterprise value below $500 million.8 And consistent with what we see in private markets more broadly, small and middle-market climate opportunities may benefit from a more fragmented opportunity set comprised of many more companies. This middle-market dynamic generally brings lower entry valuations and less competition relative to large cap offering investors opportunities for potential outperformance, as evidenced with top quartile, average, and median performance for funds below $3 billion exceeding that of funds over $3 billion.9

Unlike the large cap market, which relies heavily on IPOs, we believe the middle market offers greater exit optionality such as sales to strategic buyers or financial buyers across pensions, sovereign wealth funds, and other private equity investors, as well as partial financing-based exits such as secondary fund market transactions. Greater exit optionality has broadly materialized in better liquidity in the middle market compared to the large cap market10 and we believe these advantages will continue for the foreseeable future.

Evaluating the relative performance between large and middle-market funds in the climate landscape requires some adjustment given there have been less than a dozen climate funds over $3 billion and even fewer over $5 billion. Given the nascency of the climate segment, in the chart below we have broadened our standard large cap threshold of $5 billion and included any funds over $3 billion. However, the dataset below is useful in illustrating that the relationship between the middle market and excess return potential that exists more broadly in private markets is also present in the climate market with top quartile, average, and median performance for funds below $3 billion exceeding that of funds over $3 billion.

Climate-focused net IRR by fund strategy (2013 - 2022 vintages)

Source: Preqin and HarbourVest proprietary data as of June 30, 2024. Includes closed-end, commingled private equity and infrastructure climate-focused funds with an OECD primary focus. Middle-market analysis for the chart includes funds with a final fund size between $200 million and $3 billion and large cap includes funds with a final fund size over $3 billion. Funds below $200 million are excluded to limit any skew from non-institutional platforms and highlight performance potential of middle market compared to large cap. HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, or experience. Past performance is not a reliable indicator of future results.

While we see greater outperformance potential in the middle market across both private equity and infrastructure, there is also a wider dispersion of returns in this segment relative to the large cap market.11 Investing in the middle market requires a more sophisticated diligence process and more resources than investing in the large cap segment as some GPs may be less institutionalized and company operations less professionalized.

Key takeaways

HarbourVest has been an early climate investor since the advent of Cleantech 1.0 in the early 2000s, when venture innovation was focused on initiatives such as novel biofuel technology and solar panel manufacturing. The experience gained both in those early days and as the market has grown and scaled has provided valuable insights that shape how we view climate investing going forward, including:

  • Flexibility is necessary given the evolving market trends and technologies within the climate segment, but it is also crucial to back experienced investment talent that has differentiated market insights, a proven ability to invest into companies with sustainable competitive advantages, and strong management teams that can execute value creation strategies.
  • It is particularly important in climate investing to focus underwriting on cash flow and capital availability given the potential for long commercialization timelines for many climate-related technologies.
  • Diversification across managers, geographies, and different private markets strategies and transaction types is vital to creating a return-driven climate portfolio that can participate in the diverse opportunities evolving across cutting-edge technologies and more mature legacy industries.
  • Optimizing a climate portfolio requires a disciplined and diversified transaction approach spanning co-investments, primaries, and secondary transactions to potentially enhance portfolio duration, income, and risk-adjusted returns.
  • The climate-related middle-market segment represents a large and meaningful portion of the current climate opportunity set and is an important area of focus for investors as they build out a return-focused climate portfolio.

2024 was a pivotal year across the globe in terms of elections and potential change to climate policies and subsidies, but we believe the fundamentals of climate-related technologies and business models remain commercially viable without subsidies and should withstand the shorter-term consequences of changing administrations. While the most experienced players in the market are not inclined to make investments dependent upon government policies or subsidies that can be upended, these concerns reinforce the importance of creating diversified and flexible climate portfolios that can adapt to innovation within an ever-evolving landscape.

Footnotes
  1. Bloomberg NEF, Energy Transition Investment Trends 2024, January 30, 2024.
  2. Climate is defined broadly as investments in strategies and companies focused on renewable energy, industrial decarbonization, transitioning legacy assets and low or no carbon business models, circular economy investments, climate technologies, or other investments focused on the decarbonization of the economy and/or climate resiliency.
  3. Bloomberg NEF, Energy Transition Investment Trends 2024, January 30, 2024.
  4. HarbourVest proprietary market sizing estimates for closed-end, commingled private equity and infrastructure climate-focused funds with an OECD primary focus as of November 15, 2024. Bubble size represents approximate market size by capitalization. Analysis only includes GPs that have institutional quality offerings as determined by HarbourVest investment teams and excludes open-end funds, fund of funds, special purpose vehicles, and co-investment vehicles. Number of distinct GP fund strategies is based on the number of different strategies offered by a specific GP and not the number of individual funds offered by a GP.
  5. Preqin and HarbourVest proprietary data as of June 30, 2024. Includes closed-end, commingled private equity and infrastructure climate-focused funds with an OECD primary focus. Core-plus and value-add strategies and growth and buyout strategies are bucketed together as the line between these strategies is inconsistent. HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, or experience. Past performance is not a reliable indicator of future results.
  6. Preqin and HarbourVest proprietary data as of June 30, 2024. Based on analysis comparing net IRR performance of specialist climate infrastructure funds (over 60% of strategy focused on climate and energy transition broadly) to generalist infrastructure funds between 2013-2022. Includes closed-end, commingled infrastructure funds with an OECD primary focus. Funds below $200 million and over $5 billion are excluded to focus on middle-market segment performance. HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, or experience. Past performance is not a reliable indicator of future results.
  7. Preqin and HarbourVest proprietary data as of June 30, 2024. Based on analysis comparing net IRR performance of specialist climate infrastructure funds (over 60% of strategy focused on climate and energy transition broadly) to generalist infrastructure funds between 2013-2022. Includes closed-end, commingled infrastructure funds with an OECD primary focus. Funds below $200 million and over $5 billion are excluded to focus on middle-market segment performance. HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, or experience. Past performance is not a reliable indicator of future results.
  8. Based on analysis of EIA Form 861, which includes 13,500 power plants in the US, data as of December 31, 2023. Based on current market cost of capital assumptions.
  9. Preqin and HarbourVest proprietary data as of June 30, 2024. Includes closed-end, commingled private equity and infrastructure climate-focused funds with an OECD primary focus. Middle market includes funds with a final fund size between $200 million and $3 billion and large cap includes funds with a final fund size over $3 billion. Funds below $200 million are excluded to limit any skew from non-institutional platforms and highlight performance potential of middle market compared to large cap. HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, or experience. Past performance is not a reliable indicator of future results.
  10. Preqin and HarbourVest proprietary data as of June 30, 2024, based on realizations for vintages 2017-2020 for closed-end, commingled infrastructure funds with an OECD primary focus. Middle market represents funds with a final fund size between $200 million and $5 billion. Large cap represents funds with a final fund size of over $5 billion. HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, or experience.
  11. Preqin and HarbourVest proprietary data as of June 30, 2024. All middle-market analysis includes closed-end, commingled funds with an OECD primary focus. Middle-market generalist infrastructure analysis is based on only infrastructure funds between $200 million and $5 billion, with large cap being over $5 billion. First quartile middle-market infrastructure funds have achieved 317 basis points of outperformance relative to large cap and median returns have outperformed by 20 basis points, but third quartile performance lags by more than 300 basis points, illustrating the wider dispersion and band of outcomes. HarbourVest proprietary data set comprised of information aggregated from multiple data sources, including HarbourVest and third-party data providers. Not representative of any HarbourVest fund, account, or experience. Past performance is not a reliable indicator of future results.
Disclosure

HarbourVest Partners, LLC (“HarbourVest”) is a registered investment adviser under the Investment Advisers Act of 1940. This material is solely for informational purposes; the information should not be viewed as a current or past recommendation or an offer to sell or the solicitation to buy securities or adopt any investment strategy. The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication, are not definitive investment advice, and should not be relied upon as such. This material has been developed internally and/or obtained from sources believed to be reliable; however, HarbourVest does not guarantee the accuracy, adequacy, or completeness of such information. The information is subject to change without notice and HarbourVest has no obligation to update you. There is no assurance that any events or projections will occur, and outcomes may be significantly different than the opinions shown here. This information, including any projections concerning financial market performance, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the express written approval of HarbourVest. 

ESG Investing. The principles related to sustainable and responsible investing discussed above represent general goals that will not be achieved by investment selected. These goals are not representative of current processes or outcomes for every strategy and may not be fully realized for all products or client accounts. There can be no assurance any initiatives or anticipated developments described herein will ultimately be successful. The information provided is solely for informational purposes and should not be relied upon in connection with making any investment decision. It should not be assumed that any ESG initiatives, standards, or metrics described herein will apply to each asset in which HarbourVest invests or that any ESG initiatives, standards, or metrics described have applied to each of HarbourVest’s prior investments. ESG is only one of many considerations that HarbourVest takes into account when making investment decisions, and other considerations can be expected in certain circumstances to outweigh ESG considerations. The information provided is intended solely to provide an indication of the ESG initiatives and standards that HarbourVest applies when seeking to evaluate and/or improve the ESG characteristics of its investments as part of the larger goal of maximizing financial returns on investments. Any ESG initiatives described will be implemented with respect to a portfolio investment solely to the extent HarbourVest determines such initiative is consistent with its broader investment goals. Accordingly, certain investments may exhibit characteristics that are inconsistent with the initiatives, standards, or metrics described herein.

Nothing herein should be construed as a solicitation, offer, recommendation, representation of suitability, legal advice, tax advice, or endorsement of any security or investment and should not be relied upon by you in evaluating the merits of investing in HarbourVest funds or in any other investment decision.

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Professional Investor Definition

“Professional Investor” under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “SFO”) and its subsidiary legislation) means:

(a) any recognised exchange company, recognised clearing house, recognised exchange controller or recognised investor compensation company, or any person authorised to provide automated trading services under section 95(2) of the SFO;

(b) any intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong;

(c) any authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;

(d) any insurer authorized under the Insurance Ordinance (Cap. 41 of the Laws of Hong Kong), or any other person carrying on insurance business and regulated under the law of any place outside Hong Kong;

(e) any scheme which-

(i) is a collective investment scheme authorised under section 104 of the SFO; or

(ii) is similarly constituted under the law of any place outside Hong Kong and, if it is regulated under the law of such place, is permitted to be operated under the law of such place,

or any person by whom any such scheme is operated;

(f) any registered scheme as defined in section 2(1) of the Mandatory Provident Fund Schemes Ordinance (Cap. 485 of the Laws of Hong Kong), or its constituent fund as defined in section 2 of the Mandatory Provident Fund Schemes (General) Regulation (Cap. 485A of the Laws of Hong Kong), or any person who, in relation to any such registered scheme, is an approved trustee or service provider as defined in section 2(1) of that Ordinance or who is an investment manager of any such registered scheme or constituent fund;

(g) any scheme which-

(i) is a registered scheme as defined in section 2(1) of the Occupational Retirement Schemes Ordinance (Cap. 426 of the Laws of Hong Kong); or

(ii) is an offshore scheme as defined in section 2(1) of that Ordinance and, if it is regulated under the law of the place in which it is domiciled, is permitted to be operated under the law of such place,

or any person who, in relation to any such scheme, is an administrator as defined in section 2(1) of that Ordinance;

(h) any government (other than a municipal government authority), any institution which performs the functions of a central bank, or any multilateral agency;

(i) except for the purposes of Schedule 5 to the SFO, any corporation which is-

(i) a wholly owned subsidiary of-

(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or

(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;

(ii) a holding company which holds all the issued share capital of-

(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or

(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong; or

(iii) any other wholly owned subsidiary of a holding company referred to in subparagraph (ii); or

(j) any person of a class which is prescribed by rules made under section 397 of the SFO for the purposes of this paragraph as within the meaning of this definition for the purposes of the provisions of the SFO, or to the extent that it is prescribed by rules so made as within the meaning of this definition for the purposes of any provision of the SFO.

The first of such classes of additional “professional investor”, under the Securities and Futures (Professional Investor) Rules (Cap. 571D of the Laws of Hong Kong), are:

(k) any trust corporation (registered under Part VIII of the Trustee Ordinance (Cap. 29 of the Laws of Hong Kong) or the equivalent overseas) having been entrusted under the trust or trusts of which it acts as a trustee with total assets of not less than HK$40 million or its equivalent in any foreign currency at the relevant date (see below) or-

(i) as stated in the most recent audited financial statement prepared-

(A) in respect of the trust corporation; and

(B) within 16 months before the relevant date;

(ii) as ascertained by referring to one or more audited financial statements, each being the most recent audited financial statement, prepared-

(A) in respect of the trust or any of the trust; and

(B) within 16 months before the relevant date; or

(iii) as ascertained by referring to one or more custodian (see below) statements issued to the trust corporation-

(A) in respect of the trust or any of the trusts; and

(B) within 12 months before the relevant date;

(l) any individual, either alone or with any of his associates (the spouse or any child) on a joint account, having a portfolio (see below) of not less than HK$8 million or its equivalent in any foreign currency at the relevant date or-

(i) as stated in a certificate issued by an auditor or a certified public accountant of the individual within 12 months before the relevant date; or

(ii)  as ascertained by referring to one or more custodian statements issued to the individual (either alone or with the associate) within 12 months before the relevant date;

(m) any corporation or partnership having-

(i) a portfolio of not less than HK$8 million or its equivalent in any foreign currency; or

(ii) total assets of not less than HK$40 million or its equivalent in any foreign currency, at the relevant date, or as ascertained by referring to-

(iii) the most recent audited financial statement prepared-

(A) in respect of the corporation or partnership (as the case may be); and

(B) within 16 months before the relevant date; or

(iv) one or more custodian statements issued to the corporation or partnership (as the case may be) within 12 months before the relevant date; and

(n) any corporation the sole business of which is to hold investments and which at the relevant date is wholly owned by any one or more of the following persons-

(i) a trust corporation that falls within the description in paragraph (k);

(ii) an individual who, either alone or with any of his or her associates on a joint account, falls within the description in paragraph (k);

(iii) a corporation that falls within the description in paragraph (m);

(iv) a partnership that falls within the description in paragraph (m).

For the purposes of paragraphs (k) to (n) above:

  • “relevant date” means the date on which the advertisement, invitation or document (made in respect of securities or structured products or interests in any collective investment scheme, which is intended to be disposed of only to professional investors), is issued, or possessed for the purposes of issue;
  • “custodian” means (i) a corporation whose principal business is to act as a securities custodian, or (ii) an authorised financial institution under the Banking Ordinance (Cap. 155 of the Laws of Hong Kong); an overseas bank; a corporation licensed under the SFO; or an overseas financial intermediary, whose business includes acting as a custodian; and
  • “portfolio” means a portfolio comprising any of the following (i) securities; (ii) certificates of deposit issued by an authorised financial institution under the Banking Ordinance (Cap, 155 of the Laws of Hong Kong) or an overseas bank; and (iii) except for trust corporations, cash held by a custodian.

Institutional Investor / Accredited Investor Definition

An institutional investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:

(a) the Singapore Government;

(b) a statutory board as may be prescribed by regulations made under section 341 of the SFA, as prescribed in the Second Schedule of the Securities and Futures (Classes of Investors) Regulations 2018;

(c) an entity that is wholly and beneficially owned, whether directly or indirectly, by a central government of a country and whose principal activity is —

(i) to manage its own funds;

(ii) to manage the funds of the central government of that country (which may include the reserves of that central government and any pension or provident fund of that country); or

(iii) to manage the funds (which may include the reserves of that central government and any pension or provident fund of that country) of another entity that is wholly and beneficially owned, whether directly or indirectly, by the central government of that country;

(d) any entity —

(i) that is wholly and beneficially owned, whether directly or indirectly, by the central government of a country; and

(ii) whose funds are managed by an entity mentioned in sub‑paragraph (c);

(e) a bank that is licensed under the Banking Act 1970;

(f) a merchant bank that is licensed under the Banking Act 1970;

(g) a finance company that is licensed under the Finance Companies Act 1967;

(h) a company or co‑operative society that is licensed under the Insurance Act 1966 to carry on insurance business in Singapore;

(i) a company licensed under the Trust Companies Act 2005;

(j) a holder of a capital markets services licence;

(k) an approved exchange;

(l) a recognised market operator;

(m) an approved clearing house;

(n) a recognised clearing house;

(o) a licensed trade repository;

(p) a licensed foreign trade repository;

(q) an approved holding company;

(r) a Depository as defined in section 81SF of the SFA;

(s) a pension fund, or collective investment scheme, whether constituted in Singapore or elsewhere;

(t) a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors;

(u) a designated market‑maker as defined in paragraph 1 of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations;

(v) a headquarters company or Finance and Treasury Centre which carries on a class of business involving fund management, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43D(2)(a) or 43E(2)(a) of the Income Tax Act 1947;

(w) a person who undertakes fund management activity (whether in Singapore or elsewhere) on behalf of not more than 30 qualified investors;

(x) a Service Company (as defined in regulation 2 of the Insurance (Lloyd’s Asia Scheme) Regulations) which carries on business as an agent of a member of Lloyd’s;

(y) a corporation the entire share capital of which is owned by an institutional investor or by persons all of whom are institutional investors;

(z) a partnership (other than a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2005) in which each partner is an institutional investor.

An accredited investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:

(i)  an individual —

(A) whose net personal assets exceed in value $2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(B) whose financial assets (net of any related liabilities) exceed in value $1 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount, where “financial asset” means —

(BA) a deposit as defined in section 4B of the Banking Act 1970;

(BB) an investment product as defined in section 2(1) of the Financial Advisers Act 2001; or

(BC) any other asset as may be prescribed by regulations made under section 341; or

(C) whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(ii)  a corporation with net assets exceeding $10 million in value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by —

(A) the most recent audited balance sheet of the corporation; or

(B) where the corporation is not required to prepare audited accounts regularly, a balance sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance sheet, which date must be within the preceding 12 months;

(iii) A trustee of a trust which all the beneficiaries are accredited investors; or

(iv) A trustee of a trust which the subject matter exceeds S$10 million; or

(v) An entity (other than a corporation) with net assets exceeding S$10 million (or its equivalent in a foreign currency) in value. “Entity” includes an unincorporated association, a partnership and the government of any state, but does not include a trust; or

(vi) A partnership (other than a limited liability partnership) in which every partner is an accredited investor; or

(vii) A corporation which the entire share capital is owned by one or more persons, all of whom are accredited investors.

Continuation solutions encompass a host of transaction types in which a GP secures interim liquidity and/or additional primary capital for their LPs in a strongly performing asset, or set of assets, that the GP will continue to own and control. Specifically, they include continuation funds, new funds created by GPs for the purpose of acquiring the asset(s) that continue to be managed by the same GP and capitalized by one or several secondary buyers, or equity recapitalizations involving a direct equity or structured equity investment into a portfolio company. These transactions can also include a parallel investment from the GP’s latest fund into that same pool of assets (a “cross-fund trade”).