US public pension funds are the most prolific backers of the largest impact managers in the world, according to New Private Markets’ research.
The Impact 20, our proprietary ranking of private markets impact managers based on the amount of capital raised, went live earlier this week. An analysis of the investor bases for each of the funds featured shows that 23 limited partners have committed to more than one fund managed by our Impact 20 firms.
Of those 23, 11 are US public pension funds. This does not necessarily indicate a dedicated impact strategy or even a desire to create a measurable impact. For example, the Washington State Investment Board, a two-time backer of TPG’s Rise funds, seeks to “maximise performance at prudent levels of risk” for all investments, a spokesperson told New Private Markets.
The New Jersey Division of Investment, which has also backed multiple TPG Rise funds, says “all investment decisions are made in line with the division’s fiduciary duty to generate the best financial outcomes for plan participants at an acceptable level of risk”. Performance history, investment strategy, ESG policy and impact methodology are “all given full consideration”, says a spokeswoman.
The Teachers’ Retirement System of Texas is a repeat backer of Actis’s funds, but impact considerations are not part of the selection process. “We have no formal policy on impact or ESG investing at this point. We invest in Actis Infra, but only because they produce good returns for our teachers,” said a spokesperson.
Development finance institutions and government-related investors continue to be frequent investors in large-scale, commercial impact funds. For example, the European Investment Fund – which invested with Tikehau twice – said it committed a total of €286 million to social and environmental impact funds in 2020 and expects to invest “1.5x to 2x this amount in 2021”. CDC Group, the UK DFI, invested in an Apis and two BlueOrchard impact funds – despite pivoting to direct investments, as Rohit Anand told Infrastructure Investor’s Global Offsite Investor conference last week.