Private markets secondaries investors are starting to take more of an interest in the impact space, according specialist firm North Sky Capital.
“We are starting to see some mainstream secondaries players take interest in the secondaries market within impact,” said Tom Jorgensen, managing director at the firm, in a video interview at the Impact Investor Global Summit. North Sky runs an impact-focused secondaries fund programme alongside a sustainable infrastructure platform.
Jorgensen said “mainstream” secondaries players were eyeing GP-led opportunities, in which a GP identifies one asset – or a group of assets – and creates a structure with a new time horizon and fresh capital to continue managing the asset. In such deals, which are more concentrated than buying a diversified portfolio of fund stakes in an LP-led deal, “the transaction sizes are larger and [secondaries firms’] ability to write cheques and focus on specific assets is greater”, said Jorgensen.
Jorgensen reports an increase in dealflow on the LP-led side, where he has seen “more investors get into impact investing, [who] are now allocating capital to other areas, driving secondary opportunities” of larger sizes.
In terms of areas of opportunity, Jorgensen sees the most growth and opportunity in themes relating to environmental impact, “specifically around circulal economy themes, waste and water opportunities, as well as sustainable agriculture”.
“It’s an area that has long had private capital invested in it, but only in more recent years have we seen more dedicated funds in the space,” he said.