Lloyd’s Underwriting Room

Lloyd’s of London, the insurance marketplace known for its long history and iconic London headquarters, has launched a private markets impact fund – managed by Schroders Capital – with a £250 million ($312 million; €284 million) initial commitment.

The fund will invest “globally across private equity, infrastructure, natural capital and real estate” and will pursue investments aligned with four themes: climate mitigation, climate adaptation, circular economy and social inclusion, according to a press release.

Impact funds that allocate capital across different asset classes are unusual, but not unheard of. BlackRock, for example, has multi-asset class US vehicle that targets companies and projects owned or led by Black, Latinx or Native American teams. Brookfield Asset Management‘s market leading Global Transition Fund can invest across infrastructure and private equity assets.

In the Lloyd’s impact fund, the private equity allocation will primarily target circular economy and climate adaptation investments in both developed and emerging economies. The infrastructure and real estate allocations will both address climate adaptation and mitigation, as well as social inclusion, and the allocation to natural resources will “directly address climate mitigation through investing in timber/forestry initially”, a spokesperson for Lloyd’s told New Private Markets.

Target returns for the fund have not been made public, but the spokesperson said it is “targeting double digit growth”. The intention is for it to be invested primarily in direct investments, “though in cases where the allocations are initially smaller or more specialist, the fund will use specialist funds to ensure sufficient diversity of investments”, the spokesperson said.

Lloyd’s of London is a pre-eminent global insurance marketplace that can trace its roots back to a coffee shop in the mid-17th century. In March last year it partnered with Schroders to launch its investment platform, with the aim of granting access for participants in the Lloyd’s market – insurers, reinsurers and others – to a series of third-party funds. The impact fund is the first offering on the platform.

The Lloyd’s market is “supported by around £95 billion of globally-invested assets and the Lloyd’s Investment Platform is designed to provide investors with access to opportunities”, according to the statement.

“The design of the fund is itself innovative,” said Eleanor Bucks, chief investment officer of Lloyd’s, “being open-ended in nature and categorised as an impact fund.”

The fund will be “underpinned by key performance indicators to measure and demonstrate effective progress and alignment to Article 9 Principles under Sustainable Finance Disclosures Regulation,” said Ajeet Manjreker, head of UK client solutions at Schroders.

The fund will start with an initial investment from Lloyd’s balance sheet of £250 million in capital.

“Lloyd’s has committed to be the insurer of the transition to net zero, providing both the capital and the capability to enable industries and economies to build a sustainable future,” said John Neal, Lloyd’s chief executive. “The insurance industry has a critical role to play insuring the risks associated with transition, and providing the investment to accelerate progress.”