Bridges Fund Management’s Evergreen vehicle is in a “very nice spot”, according to fund head Tom Biddle, after the sale of home decarbonisation platform AgilityEco returned a money multiple of 3.4x and an IRR of 40 percent on the original investment.
Impact pioneer Bridges launched Evergreen as a long-term capital vehicle in 2016. It has since done five deals from the fund. AgilityEco’s sale is the second exit, after the firm sold its stake in employee-owned elderly care provider Shaw Healthcare. In total, the fund has achieved a return of 1.5x, according to Bridges annual report released last month.
Despite AgilityEco’s impact proposition, Biddle was reluctant to attribute the strong return to the company’s sustainability credentials.”I don’t know if it puts a premium on it, but there is certainly a scarcity of high-quality assets in the space,” he told New Private Markets. “We sold to a trade buyer here who was specifically looking for a business in this niche in the market, but we ran a process that targeted both trade and PE buyers. There were certainly quite a few people who had done a lot of homework on home decarbonisation more generally.
“If you’ve got a good quality business, the exit environment is still OK. And this was a business that has done tremendously well, tripling revenue over the period of our ownership. So we were going into the exit process knowing that we had a high quality asset that was the leading player in its market in terms of both quality and size.”
Biddle was bullish on Evergreen’s prospects more generally for the coming year. “There isn’t another patient capital solution with a strong impact focus in our part of the market. Therefore we’re able to be pretty selective in terms of the deals that we look to do,” he said. “The fund is in good shape. The portfolio, going into 2024… we’re in a very nice spot actually. We’ve got a couple of assets that will hopefully have a particularly good year,” he said.
On the benefits of the fund’s evergreen structure when it comes to impact, Biddle added: “We are able to sit down with management teams and say we genuinely do not care about the length of the ownership period. We can be completely flexible and exit at the right time for the business rather than… be driven by any fund dynamics. That’s a pretty powerful sell to any management team when you overlay the fact that these management teams are working in highly impactful businesses, typically healthcare, education, energy transition businesses, where there are very vulnerable stakeholders potentially involved. Having an institutional investor who is not time bound is really appealing.”