“Most asset owners perhaps have a dedicated impact sleeve… We really want to make an impact in all investments,” says Henrik Lundin of IMAS Foundation.
IMAS Foundation is considering its next move. Lundin has just stepped into the combined role of CEO and CIO, having held the CIO post since 2018. He has big plans for the investor, and sustainability is at the centre of them.
Created by IKEA founder Ingvar Kamprad, IMAS is one of three foundations linked to the global homeware retailer. Its priority is generating long-term returns, per its website, and its portfolio is worth €13.4 billion.
“We’re a relatively small investor, but it’s still significant tickets that we can allocate,” says head of private equity Willem Huidekoper, speaking to New Private Markets in January. It has certainly been doing that: the foundation recently met its goal of investing €1 billion into energy transition-related assets, and has allocated to funds managed by with Generation IM offshoot Just Climate and Climate Fund Managers. It has also done three direct investments, including Swedish battery manufacturer NorthVolt.
The foundation has been steadily growing its private markets allocation, such that it now makes up approximately 35 percent of the portfolio. Impact considerations have been a key factor in this decision, as Lundin explains: “We have concluded that the best and most efficient way to approach sustainability and also to address decarbonisation is through private markets… that’s why we decided to gradually move money from the public space to the private.”
The foundation is now developing a strategy that will define its sustainability approach for the future. As part of this, private equity lead Huidekoper has taken on additional responsibility for sustainability efforts across all asset classes.
“We want a more holistic view on sustainability across the portfolio and to articulate how we want to approach it”, he explains. “It’s about saying: Okay, what are the new targets at the portfolio level? What do we want to do more? Where do we want to focus? It’s also about reviewing the things we did before and trying to synchronise everything.”
“The last few years we have really been busy deploying capital and reaching a state where the portfolio is quite mature,” adds Lundin. “We won’t see a heavy flow of new investments. But with that said, there are opportunities to tweak things to make it really consistent with how we view sustainability. So, we will probably see some more reshuffling, rather than a lot of new investments.”
Alongside this, IMAS will continue increasing its private markets exposure to as much as 50 percent.
The foundation’s relatively low liquidity requirements make private markets more attractive. It provides sister institution Ikea Foundation with up to €400 million a year to support its philanthropic endeavours, but otherwise does not have regular outgoings. The foundation is also intended to act as a “rainy day fund” for the main Ikea business, should it run into difficulty.
“Even though we don’t have any clients that can knock at our doors and want capital, we still have to strike a balance over how much liquid assets we should have. So, 50 percent or slightly less is the non-listed exposure where we would be comfortable staying long term,” explains Lundin.
Until now, most of IMAS’s impact activities have focused on the energy transition, although it has also allocated capital to healthcare and foodtech strategies. The next stage of investments may see the firm explore new areas. “We haven’t done much on social impact investments, but it’s definitely an area for discussion. If we want to approach it, there are different ways of doing it that you can look at: diverse managers, for instance,” Huidekoper says.
Natural capital is another area of consideration: “That’s something under review. We feel strongly we have to put it on the radar to consider, but we’re not adding that kind of exposure at the moment,” says Huidekoper.
When it comes to selecting GPs, IMAS typically looks for managers with funds of at least €200 million. It has invested in first time funds in the past, but may change this approach. “We need to take critical look at first-time manages,” says Huidekoper, “Although we have no bad experience with it… but we’ve seen some things here and there… So it’s something that we’re going to be a bit more cautious about going forward.”
‘Playing a big role’
Irrespective of the strategic rationale, IMAS’s leadership has a personal wish to see its capital drive positive change. “If we can allocate to the right things, in companies or projects that are really making the difference, that is exciting to me and it makes me super proud,” says Huidekoper.
As IMAS’s portfolio matures, the hope is that others will follow their lead. Lundin concludes: “The finance community is really playing big role in trying to achieve less than two degrees global warming. If we can show returns and impact are possible with our results, I think that would encourage other investors.”