UK-based impact firm Bridges Fund Management has allocated “a small portion” of its latest property fund to European investments as it pursues an ambition to scale globally.
Bridges has closed Property Fund V on its £350 million ($427 million; €408 million) hard-cap, most of which was raised from UK-based investors, Maggie Loo, a partner at the firm, told New Private Markets. More than £170 million came from repeat LPs including UK pension funds such as Clwyd, East Riding, Merseyside, South Yorkshire and the Environment Agency Pension Fund.
New investors included Church Commissioners for England; UK-based charity Dunhill Medical Trust; French family office Enowe; the JW McConnell Family Foundation, a Canadian family office; and Mercer Private Investment Partners’ sixth fund.
Bridges has set its sights on scaling globally, chief executive and co-founder Michelle Giddens told New Private Markets last year. Founded in 2002 to tackle social and environmental issues while delivering financial returns, the firm was among the earliest participants in impact investing. It has raised £308 million across seven UK-focused private equity and venture capital funds, and $63 million for a US-focused growth vehicle. Bridges debuted its real estate series in 2009 and raised more than £507 million over four previous UK-focused property funds, according to affiliate publication PERE’s database.
While many would-be investors in real estate impact funds would prefer locally-focused strategies, “they were able release the geographical constraint in order to find the best-in-class manager”, said Loo. “There’s a realisation that if you’re looking for the [social and environmental impact] results, you can’t have it locally.
“The North American investor worked with a consultant specifically for a request-for-proposals for impactful real estate. They had certain parameters around the target returns, and they asked us to use the Impact Management Project framework to outline how the investment strategy would deliver on impact.”
Fund V, launched in March 2020, was raised through the pandemic “and we didn’t go on the road at all”, said Loo. “We hope that for Fund VI, with being able to travel and meet investors and with a further track record of investing outside the UK, we’ll be able to continue to make headway with going global.”
Bridges is pursuing three themes for Fund V: healthcare (such as care homes and assisted living properties); low carbon logistics properties and affordable and low-cost housing. The fund will be invested entirely in property development opportunities in the UK, aside from the small allocation to Europe, said Loo. “When it comes to Fund VI, we’ll consider whether to increase that allocation or to tackle the European market in a different way,” she added.
The fund is compliant with Article 9 of the EU’s Sustainable Finance Disclosure Regulation because its newly-built assets are developed with sustainability in mind. Article 9 compliance excludes funds that decarbonise existing assets with large carbon footprints. Loo said achieving Article 9 compliance has not restricted Bridges’ strategy for Fund V – Bridges would build new for this fund regardless of Article 9’s criteria – “but there is a lot of need for capital to flow to assets that are currently not fully sustainable, but with a view to making them more sustainable”, Loo concluded.