In brief: A neat way of agreeing robust KPIs

Trill Impact uses the same company-specific KPIs for its impact-linked carry as banks use for their financing – ‘in that way we also have an external eye and verification on the plan’.

In discussions about tying carried interest to impact or ESG metrics, choosing the right metrics and verifying the results is always a sticking point. A situation in which the GP sets its own homework and then does the marking is far from ideal.

Trill Impact, the private equity firm that raised a €900 million debut fund in 2021 and this year unveiled a new impact venture platform, has a portion of its carried interest linked to impact metrics. It has neat way of adding credibility to KPIs: bring in the banks.

“Prior to signing, we discuss with management what kind of KPIs would be relevant to them in their incentive programme and to our carry,” Pia Irell, an impact partner at the firm, told delegates in a standing-room-only breakout session at the Impact Investor Global Summit on innovative impact structures. “So that is basically predefined prior to signing. At that point, we also have a discussion with the bank on their financing.”

The banks then use the same set of KPIs for the company’s sustainability-linked loans. “So we get that all aligned,” said Irell. “In that way we also have an external eye and verification on the plan.”