LGPS pools take Clean Growth Fund's second close to £81.5m

Border to Coast Pensions Partnership has committed £22.5m through its Climate Opportunities Strategy and Strathclyde Pension Fund has increased its stake to £30m, taking the Clean Growth Fund's second close to £81.5m, according to Net Zero Investor, past halfway toward the £150m target after a first close backed by Strathclyde, Islington, and East Riding is counted.

That money is earmarked for UK companies at Series A whose technologies could cut emissions while the country's green economy grows, against a target net internal rate of return of 20%, with four investments already in place across Sheffield, Bristol, Cardiff, and London in battery materials, food, heavy industry, and buildings, and a stated aim of 25 companies. Fund I's 19 start-ups, the firm says, are on track to avoid 27m tonnes of CO2e a year by 2030.

Gower-Jones, founder and managing partner, frames Fund II as a bridge between British institutional capital and British innovation — “The returns and the impact go hand-in-hand,” she told Net Zero Investor — and the existing portfolio runs from Clean Food Group's palm-oil alternatives to AmpliSi, a University of Sheffield spin-out making porous silicon for battery anodes, with a recent exit from Redesco, a provider of ground-source heat systems for UK homes and buildings.

Keith Angood, portfolio manager at Border to Coast, says Fund II matches the objectives of the pool's UK Opportunities Fund: a growing sector, an experienced team, and long-term value for partner funds. Net Zero Investor reads the round as growing investor demand for climate venture solutions, but the disclosed roster supports a narrower reading — the second close's capital is public pension money, placed by an LGPS pooling vehicle and a local-government pension fund, not by a private asset manager.

The pattern this publication has identified across transition assets is now showing up at the venture stage, where public capital sets underwriting terms and private allocators either co-invest on those terms or miss the asset class. Venture is the sharper version because the pools are accepting market risk without a subsidy attached; a 20% net IRR target on illiquid, UK-only Series A is a demanding price, and the disclosed investors willing to back it at that size are public pension funds.

The remaining £68.5m of the target is where the outcome turns. If later closes bring private names onto the cap table at these terms, the LGPS will have priced Series A climate risk for the whole market; if the money stays public, UK climate venture remains, for now, a balance-sheet project of the local-government pension system.