In brief: AP Ventures puts management fee on the line for ESG

The hydrogen-focused VC firm AP Ventures closed its second fund on $316m this year, with Temasek as an LP.

Hydrogen-focused venture capital fund AP Ventures has tied its management fee to its ESG performance. AP Ventures raised $316 million this year for its second fund from Singaporean state-backed investor Temasek and 11 other corporates and investment firms.

“Some of our management fee is actually at stake if we don’t meet our ESG targets,” said Meryem Cherif, an associate at AP Ventures, at affiliate title Infrastructure Investors Global Summit in Berlin. Cherif declined to provide further details about the ESG targets, how they are measured or how much of the management fee is at stake.

Linking carried interest to impact or ESG targets is a fledgling policy for fund managers. But applying impact or ESG targets to the core management fee is even less common. Sydney-based Gunn Agri Partners is believed to be a first mover in this space – it is linking its second vehicle’s fees to sustainability metrics, the firm told Agri Investor in 2020.