Development Partners International, an Africa-focused private equity firm that just raised $1.15 billion, positions itself as having “deep integration of impact and ESG initiatives”. But what does that mean?
The firm raised $900 million for its third fund, it announced last week, and raised a further $250 million in co-investment capital. This puts it among the largest pools of private equity capital dedicated to investing in Africa.
CDC Group, the development finance institution that cornerstoned DPI’s second fund and recently committed $100 million to the latest vehicle, said it has “confidence in DPI’s hands-on approach to value creation”. The firm is making “strong strides in ESG and development impact, while also embedding gender-lens investing and climate change into its investment mandate”, it said.
Runa Alam, DPI’s chief executive officer, told New Private Markets that the firm’s long relationship with development finance institutions meant that from day one the firm had side letters with ESG stipulations from investors. “What makes us different is that we have existed in Africa investing in impact for 20 years. We never had a choice between returns and impact. It comes with our heritage.”
Alam pointed to various initiatives across both DPI’s portfolio and its own operations that demonstrate its sustainable credentials. On gender diversity: the firm has a 33 percent female senior team, said Alam. Its latest fund was the first private equity fund to be granted 2X Flagship Fund status, based on the fact that DPI has a female founder, at least 30 percent women in senior leadership and between 30 and 50 percent women on staff. Three of the four portfolio companies in Fund III are also 2X eligible.
Alongside gender balance, DPI pursues two other impact themes: climate change and job quality. The firm has also signed up to the Operating Principles for Impact Management. The firm’s various impact themes, combined with an investment approach that combines elements of impact, ESG integration and gender-lens investing, mean the firm is not easily categorised. “We don’t sit tidily into a one-liner,” said Alam, who added that the firm’s limited partners for the recent fund comprise DFIs, some impact-focused funds, and some commercial investors like US public pension plans.
The City of Philadelphia Board of Trustees committed capital to both the main fund and co-investment vehicle. Chicago Teachers’ Pension Fund allocated $10 million to the fund. In its write-up of the fund for the City of Hartford Pension Commission, investment consultant Meketa described the firm as working with “various [DFI] investors and others to innovate” in the areas of impact and ESG. Hartford also ended up committing to the fund.