In brief: Secondaries capital as a decarbonisation tool

A continuation fund could be 'the perfect mechanism' to connect capital to assets that need to be greened.

Last week we made the case that 2023 would bring a notable increase in secondaries deals involving impact and otherwise sustainability-related funds or assets. GP-led transactions would be a particular bright spot, we said. Right on cue, we broke a story about Summa Equity planning a GP-led secondaries process to move an asset, a circular economy business, from its first fund into a continuation vehicle.

As a post scriptum to our Friday Letter: GP-led transactions may prove to be a valuable tool when it comes to decarbonising industry and the built environment, says Campbell Lutyens’ head of European secondaries Immanuel Rubin. Imagine, for example, a logistics business with real estate suitable to be upgraded with solar panel arrays. The business’s private fund sponsor could be out of its investment period, but there is a clear case to be made for investing in the upgrade. Enter the continuation vehicle.

“You could potentially have an exit-stage asset, for which you need additional capital not available from the fund, and you have a clear value creation plan [in the form of the decarbonisation/energy efficiency measures],” Rubin tells New Private Markets. “A GP-led continuation fund would be the perfect mechanism.”