Swiss private equity firm Partners Group has launched its first global impact fund, PG LIFE capped at $1 billion, to focus on investments in education, healthcare, energy access, clean energy, and social inclusion.
In a statement on Tuesday, the private investor said the fund will have the dual mandate to achieve attractive risk-adjusted financial returns alongside measurable, positive social and environmental impact.
“In terms of size of investments, in line with typical PG deal sizes, it would be a $100 million to $1 billion total equity cheque from Partners Group – managed funds and/or a $200 million to $2 billion enterprise value. PG LIFE will invest alongside other Partners Group funds,” a spokesperson from the private equity firm told DEALSTREETASIA.
The person further added that interest has been strong for the vehicle and the firm expects a balanced fundraising across the Americas, EMEA and Asia-Pacific. Declining to comment on the timelines for a first or final closing for the vehicle, the group said that it is having “conversations with existing and new clients”. It has also been reported that about 75 per cent of the allocation by the fund may be for equity while the rest could be for debt.
Further, on expected returns from the fund, the person said to the portal, “we are not disclosing the target return, however, we have built a track record for this investment strategy based on eligible direct investments made since 1999, and that has yielded a gross IRR of 17.9 per cent if you’d like to reference some kind of performance indicator.” conversations with existing and new clients
Since the UN launched its 17 Sustainable Development Goals in 2015, Partners Group claims to have invested an average of more than $1 billion annually on behalf of its clients into companies and assets pursuing a strategy consistent with the goals.
Partners Group is also assembling an external council to provide advice on strategic aspects including impact measurement methodology. Confirmed members of the PG LIFE International Advisory Council include Vuk Jeremić, President of the 67th session of the UN General Assembly, and Cesar Purisima, Secretary of Finance for the Philippines from 2010 to 2016.
Urs Wietlisbach, Co-Founder of Partners Group and a Member of its Board of Directors, has also joined the LIFE Council. Further, Kevin Lu, Partner and Chairman of Asia at Partners Group, will chair the Impact Committee for PG LIFE.
The UN Commission on Trade and Development has estimated that meeting the SDGs would require $5-7 trillion in annual investment from 2015 to 2030, and it is estimated that between $4-6 trillion of this is required from private capital sources. With growing interest in impact investment, while some PE firms have launched such global vehicles others are in the process of firming up their impact investment strategies. Some of the names that have been seen to emerging in the space are Allianz Global Investors, TPG, KKR & Co and Aberdeen Standard Investments.
For instance, TPG had raised a $2 billion debut impact vehicle, The Rise Fund last year that saw support from singer turned investor Bono. Similarly, PE heavyweight KKR is also raising an impact investing fund that it registered in February. Meanwhile, Allianz Global Investors has also said that it is increasingly focusing on impact investment market which could be worth about $114 billion, according to estimates. Partners Group will be the latest one to be added to the line of such fund managers.
For the Partners Group’s impact fund, no details were given as to how much of the fund will come to the Asia Pacific, although the group has been known to be increasing investments in the region.
“In 2016 we deployed more in Asia-Pacific than we had in all the previous years combined. In 2017, we have invested more than we did in 2016. Without a doubt, the Asian market is getting deeper, and hence the proportion of deployment in Asia will rise over time,” Cyrus Driver, Managing Director, Asia Pacific and Head of Private Equity had told the portal in an interaction last year.
In fact, most of the impact investment sectors like health, education and others have emerged as the favourite investment theme for private equity players eyeing the Asia Pacific, according to the Private Markets Navigator Outlook 2018 report by Partners Group released earlier.