M&G has bought ResponsAbility, a private debt impact firm for emerging markets, “to jump two or three years ahead” in the scrum for investment firms to develop impact strategies.
The UK-headquartered asset manager is “constantly being asked for” emerging markets impact funds by investors, says Will Nicoll, chief investment officer of M&G’s private and alternative assets strategy. Meeting this demand “requires a level of confidence, a level of competence, which you have to build over the previous decades. We’re seeing impact investing become much more mainstream and envelop the various different markets. It is an enormous help for us to have a very strong, dedicated group who are there already.”
“We can offer the ResponsAbility funds to our much bigger client base,” Nicoll tells New Private Markets. ResponsAbility, which was founded in 2003, has $3.5 billion in assets under management, of which 85 percent is in private debt strategies and 15 percent in private equity strategies.
The firm has dedicated funds for climate finance, financial inclusion and sustainable food and agriculture. ResponsAbility will maintain its separate brand identity, its Zurich headquarters and its chief executive, Rochus Mommartz, M&G said in a statement.
M&G has been expanding its geographic investment focus from the UK and Europe to global investments since 2019, when it demerged from its parent company, pension and insurance provider Prudential. In February 2021, M&G launched Catalyst, a private markets impact strategy with £5 billion ($6.7 billion; €6 billion) from Prudential’s £136 billion with-profits fund. Catalyst – which today announced an investment in carbon-positive construction company Greencore – will continue to operate separately from ResponsAbility.
“Impact is easier to demonstrate and easier to measure in developing markets and more agricultural societies than it is in some other areas,” says Nicoll. “You’re more likely to have real disparities in government and various other ideas when you come to corporate investment. And so, therefore there is sometimes a lot more than you can do. There is a stronger need for financial inclusion in emerging markets, for example.”