Summa Equity has raised SKr23 billion ($2.5 billion; €2.3 billion) in four months for its third impact fund – making it Europe’s largest impact vehicle thus far.
With the additional capital, Summa will widen its investment strategy to include growth equity, taking minority positions to scale impactful companies from Series B onwards, as well as buyouts.
Summa was founded in 2016 in Stockholm by Reynir Indahl with a mandate to invest in line with the UN’s Sustainable Development Goals. The firm raised SKr4.5 billion for its first fund and SKr6.5 billion for its second, both of which had buyouts strategies.
Summa was early to recognise the importance of baking purpose into private equity. “We were seeing this shift coming,” Indahl tells New Private Markets. “Sustainability was starting to matter in 2016 because everyone was starting to see the challenges we are facing environmentally and socially. [Our thinking was that] companies providing positive benefits to the environment or society will be able to grow more.”
Last year Summa followed a handful of other private markets firms in becoming a B-Corporation. It also trialled ‘impact weighted accounts’ – an initiative from Harvard Business School – in a bid to calculate the monetary cost of its portfolio’s externalities (aka impact).
The firm takes a thematic approach to investment, backing companies in resource efficiency, changing demographics and tech-enabled transformation sectors. “The core to our growth is the domain expertise in our particular impact focus areas,” says Indahl. “We’ve become narrower and more specialised in what we do.”
Summa is sticking with this thematic approach, despite the size of its latest fund and its expansion to a growth equity strategy. “We want a broader mandate to be able to invest in all kinds of companies – not only those in which we can get a majority stake, that are a bit more mature and established,” says Indahl. “We’re looking to find the best companies that are helping to solve the challenges that we’re focused on.
“What’s different with Summa is that we started in the buyouts sector, so we are majority owners of our companies and we can be an active part of the sustainability agenda and the value creation strategy of the company. Most impact funds have been in the VC and growth stage, with minority positions. We have been a very active owner in making our companies make that transition.”
However, Summa has now got comfortable with not having a controlling stake in its portfolio companies. “We don’t need to go in and do a lot of change… in younger and more innovative companies,” Indahl says, because these companies are already so focused on sustainability across their operations and scaling positive innovation. “In more mature companies, a transition needs to happen – large value chains and infrastructure need to be transformed.”
Investors in Summa’s third fund are pensions – including the Canada Pension Plan Investment Board – family offices, funds of funds and a sovereign wealth fund. The firm recently opened an office in Munich.