Nino Tronchetti Provera, Ambienta

“The raising of a fund is just the beginning of a journey,” says Nino Tronchetti Provera, managing partner and founder of Ambienta, speaking to New Private Markets from his office in Milan.

The next journey for Ambienta, an environment-focused firm with both private equity and public markets strategies, will be a much bigger undertaking than the last one. The firm has just closed its fourth flagship private equity fund on €1.55 billion, more than double the size of its €635 million predecessor, which it raised in 2018.

The fundraise took less than six months and closed “on exactly the date set at the outset”, according to a statement from the firm. In the last months of pre-marketing the firm engaged with around 140 potential investors who between them accounted for around €5 billion of demand, Tronchetti Provera says.

Ambienta could have raised around €1 billion from existing Fund III investors alone, says Tronchetti Provera. This group ended up accounting for 55 percent of the new vehicle.

The pressing question is: how will Ambienta invest a fund that is more than twice the size of its predecessor? The answer, says Tronchetti Provera, is an increase in average deal size – although not necessarily into uncharted territory – and a couple more platform companies. He explains: there were three investments in Fund III that required €100 million of equity or more; this upper end of the size range will become the norm for Fund IV. The vehicle will also do two or three more deals than Fund III – which links to the fact that Ambienta has expanded its investment team to include an office in Paris since Fund III. The firm will also use a greater proportion of capital for add-on acquisitions.

Ambienta is a firm that operates in the now fashionable realm of environmental solutions-focused investing. In this year’s Impact 30 – the largest managers of private markets impact capital – the list is dominated by firms like TPG, Brookfield Asset Management and Goldman Sachs Asset Management – that have raised capital specifically to combat the climate crisis.

Ambienta, however, can point to a history that stretches back before environmental investing was part of the mainstream. The firm was founded in 2007. It raised €217.5 million for its first private equity fund in 2009 to invest in buyouts of businesses with the potential to benefit the environment, whether it is through energy efficiency, pollution mitigation or waste and water management.

Does Ambienta face stiffer competition for deals amid the climate investing vogue? “I will answer you the same way I answer investors,” says Tronchetti Provera. “It is now 15 years that we are in this. I’ve seen the era of clean tech, I now see the era of impact; our competitors have been, and still are, generalist private equity and trade buyers.” This is because, he explains, while recently minted climate funds might pursue growth investments in climate tech, Ambienta pursues buyouts of mature businesses that are not necessarily in the obvious climate category: a manufacturer of tractor parts that increase fuel efficiency; an additive maker that reduces the amount of cement needed in construction; coatings for furniture that do not use solvents.

“Many people focus on what I call ‘slogans’; you really need to get into the details,” he says.

This latest fundraise “allows the team to expand and grow internationally”, according to the statement. Tronchetti Provera explains that in Europe the Nordic region would be the next logical point of expansion.

The firm will also expand from private and public equity investing into other asset classes, says Tronchetti Provera: “Ambienta has been working year after year spotting environmental trends in new sectors: from energy to textiles, to food, to packaging, construction. You can apply those trends to every industry and every asset class.

“The vision is: to apply environmental sustainability to as many asset classes as possible. We are basically deciding internally which is going to be the third one.”