Urs Baumann, outgoing chief executive of impact firm Blue Earth, has one wish for the firm and its new leader: “and that is to build on the mandates business next to the funds.”
Baumann, who had been CEO since 2015, is making way for private equity fundraising veteran Stephen Marquardt to take the reins – and Marquardt is on board with Baumann’s wish.
“We expect to increase the mandates business because it is unique,” Marquardt tells New Private Markets in his first interview since taking on the chief executive role at Blue Earth. “I didn’t know that from the outside, but now that I’m inside for a couple of weeks, it’s going to be very interesting to develop that.”
This model, with flexible client mandates operating alongside pooled funds, is reminiscent of that of Partners Group, the giant private markets firm from which Blue Earth is peeling away. While Partners Group raises a significant amount of capital in pooled private fund structures, almost two-thirds of the client money it invests is through “bespoke client solutions” – either specialised mandates or evergreen fund structures.
Blue Earth has been in transition mode for the past 12 months and is gradually emerging from its incubation under Partners Group to become an independent impact investment firm. Originally called PG Impact Investments, it rebranded as Blue Earth in July 2021 and has announced plans to “reach operational independence from Partners Group” by 2025.
On the road
The firm is currently shopping its $300 million-target Climate Growth Fund, which has raised $100 million after almost 12 months on the road. More than $50 million of this is an anchor investment from the personal charitable foundation of Urs Wietlisbach, a co-founder of Partners Group and chairman of Blue Earth; the contribution was announced in April 2021. Swiss bank Union Bancaire Privée has since committed $50 million, and plans to market the fund to its clients.
Marquardt views the fact that half of the initial $100 million comes from the firm’s chairman as a boon. “Isn’t it nice to have Urs Wietlisbach cornerstone every single thing we do so that the team can hit the ground running, do an investment, and then show the other potential LPs what they can do? When you’re fundraising, people want to make sure that it’s real. And if you can say, ‘Yes, we already have 100 million and we have these three deals in the pipeline,’ they look at it in an entirely different way.”
Marquardt has a fundraising background: he was co-head of investor relations at secondaries firm Coller Capital from 2016 to 2021, and was CEO of private equity firm Doughty Hanson, having joined the firm in 2000 as head of investor relations and fundraising, affiliate title Secondaries Investor reported. He was also on the investment committee and later the board of Bridges Ventures, a UK-focused impact firm.
The vacancy appeared because Blue Earth’s outgoing CEO, Urs Baumann – who joined the firm in 2015 – was offered the chief executive position at Switzerland’s fourth largest bank, Zürcher Kantonalbank. Baumann will serve as co-CEO at Blue Earth until 31 May 2022 to support the leadership transition. “We have the perfect CEO as my successor,” Baumann tells New Private Markets. “Blue Earth was my baby, that I built up. I can step out now, knowing that the firm is in very good hands.”
Investors are hungry for impact, says Marquardt. After news broke of his appointment, he “received a number of emails from LPs that said, ‘Oh, we’re looking at impact. Now that you’re there, can you come see us and talk about it?
“They’re interested in how we measure impact. That seems to be the thing the investment committees, the trustees and the pension funds are focused on: How do you really measure impact? How does Blue Earth measure it? What are the three, four, five or, in our case, six things that we will target and how will we measure them? That’s a learning process for them because they haven’t done it before.”
A new strategy
The climate growth fund plans to make between 10 and 15 growth equity investments in the energy transition, climate intelligence, sustainable cities, sustainable agriculture and closed loop manufacturing sectors. So far, it has invested alongside General Atlantic and General Atlantic’s climate impact strategy BeyondNetZero in vertical farming company 80 Acres Farms.
Blue Earth’s founders are “putting their skin in the game”, says Baumann. “We have a completely different approach from many other firms. We invest our founders’ money, build a team and do the first transaction before we go out to the market. That’s our privilege because we have Urs [Wietlisbach] and the other founders.
“That’s unique, and I think it is very important for our clients, especially if we launch a new strategy with a new team because we put our own personal capital behind that team. And that’s something no other private equity firm would ever do or could do.”
The climate fund is the first time Blue Earth has sought to raise a pool of third-party capital. When the firm was founded in 2015, its focus was on these “specialised mandates for larger clients”, says Baumann. This involves providing bespoke investment structuring for clients, sourcing co-investment and direct opportunities and creating pools of client capital to invest in developed, emerging and frontier markets globally.
“I think we’re the only impact investing firm that can offer such global mandates to the clients, where clients can also steer the themes that are most important to them. It’s a very big advantage to talk to large clients who want to have a very tailored solution for them.
“If a family office wanted to invest 100 million and said, ‘I really want to do impact and I’d like you to diversify my portfolio globally,’ we’d be able to do that with our team in New York, in Zug, in London, in Singapore. We’d be able to do something on the credit side, on the fund side and on the climate side.”
Julia Wicklein, Blue Earth’s client relationship manager, says: “For institutional clients in Germany specifically, the hot topic is climate, so we have covered that type of interest with our first fund. However, there are many family offices, smaller pension funds and foundations that are still interested and are more focused on the social impact side.”
Marquardt concludes: “I think it is incredibly good to be able to leverage what you can do in private equity and private debt to create things that are very impactful for people’s lives in a positive way.”