Trill Impact, a firm founded in 2019 by veteran EQT founder Jan Ståhlberg, has joined the handful of private markets GPs who have linked their fund economics to impact metrics.
The firm has just closed its first fund on €900 million. The structure and terms of the fund are exactly as one would expect from a standard private equity fund, Ståhlberg told New Private Markets, including the typical 20 percent carried interest that goes to the GP once it reaches its preferred return hurdle.
However, 10 percent of that carried interest could potentially be diverted to charitable organisations in the event that the manager fails to meet certain impact targets. Those targets are specific to each individual portfolio company and will be defined and agreed at the investment stage. They will be verified by analysts at Nordea Asset Management (a backer and part owner of Trill Impact) and – in certain cases – verified by an external third party.
Trill is closely linked to Nordea, the largest financial services group in the Nordic region. Trill has access to the giant firm’s responsible investment team and its distribution capabilities, while Nordea has a 40 percent ownership stake in Trill and will take 20 percent of the carried interest earned from Fund 1. Nordea and its clients account for €300 million of the €900 million fund, and – alongside placement agent Acalyx Advisors in the US – placed the remaining €600 million with institutional investors. Campbell Lutyens also advised on the fundraise.
“If I want to build a world class investment team, I need to be able to compete with the Blackstones and EQTs of this world”
“We thought we could combine the strength of Nordea’s distribution and depth within ESG research with Jan’s experience investing in and growing businesses,” Nils Bolmstrand, CEO of Nordea Asset Management, told New Private Markets.
Ståhlberg was on the founding team at EQT in 1995 and remained at the firm, most recently as deputy CEO and vice-chairman, until September 2018. He retains a significant shareholding in the listed private markets firm, which now has a market capitalisation of more than SEK 400 billion ($47 billion; €39 billion).
There is not yet a market standard for linking carried interest to impact. For example, energy tech-focused firm EV Private Equity has put 25 percent of its carry at risk for a €350 million fund it is currently raising. This proportion is contingent on the GP meeting one overall fund-level target to do with reduced greenhouse gas emissions.
When asked whether 10 percent seems like a relatively small amount of carry for Trill to put at risk, given the impact-focused nature of the firm, Ståhlberg said the decision involved balancing the desire to demonstrate impact alignment with the need to establish a competitive, sustainable investment firm.
“If I want to build a world-class investment team, I need to be able to compete with the Blackstones and EQTs of this world,” said Ståhlberg. “You need people with world-class investment skills. I don’t want to create a company where you have to be rich to work there, or that you don’t care about money…because then you will not be a good investor.”
Ståhlberg says his ambition for Trill since its inception has been “to create a thought leader and force for positive change through impact investments, enabling like-minded investors to actively contribute to a better world and inspiring others to follow”.
Having built up considerable personal wealth through his long tenure at EQT, Ståhlberg tells New Private Markets that “it’s obvious I am not doing this for myself. I do believe it must be a profitable operation in order that it can outlive me.”
Said Nordea’s Bolmstrand: “I believe Jan has built something with impact credibility; LPs want to know that it will deliver returns. There is little doubt for us that the impact side is protected by the processes.”
Trill has a team of 20 investment and impact professionals. Its strategy for this fund is to invest in companies in the Nordics, DACH and Benelux regions of Europe with annual sales of between €15 million to €300 million. The companies must have the capacity to make an accelerated contribution to any of the UN SDGs with their products or services “or to become impact leaders in their respective industry from sustainable value chains”, according to the firm’s website.
Investors in Trill’s debut fund include: AP4 (The Fourth Swedish National Pension Fund), AP6 (The Sixth Swedish National Pension Fund), Allianz Global Investors, New York Life Insurance Company, Lucie and André Chagnon Foundation, Velliv, Pension & Livsforsikring and Nordea Life & Pensions.