M&G-owned ResponsAbility pauses fund of funds push amid legal contest

Swiss DFI SIFEM replaced Obviam with ResponsAbility as its investment manager. But Obviam is contesting this in Switzerland’s federal administrative court.

ResponsAbility Investments, the impact manager acquired by M&G in January, has put its new fund of funds strategy on hold amid a legal contest over its first mandate.

Development finance institution Swiss Investment Fund for Emerging Markets appointed ResponsAbility to manage its $1.2 billion portfolio earlier this year. The mandate is due to last from September 2022 to the end of 2027, with the option to extend it for another five years. SIFEM opened a request for proposals in 2021 to find a portfolio manager. A public filing by SIFEM states that it received four proposals, and selected ResponsAbility because it showed “very high fulfilment of the qualitative requirements for portfolio management and… delivered a very convincing presentation with their key persons”.

Since SIFEM’s creation in 2011, its portfolio had been managed by Obviam, an impact firm with $1 billion in assets under management. But the DFI has been looking to increase its private equity investments and its exposure to sectors such as food and climate finance, a spokesperson for ResponsAbility told New Private Markets. SIFEM awarded the mandate to ResponsAbility because of the firm’s previous experience in private equity and other sectors, according to the spokesperson.

Obviam, however, is contesting this decision and has lodged an appeal with Switzerland’s Federal Administrative Court. BlueOrchard, the impact firm subsidiary of Schroders, also participated in the RFP and has also lodged an appeal. “The Swiss courts are currently reviewing the awarding process,” said the ResponsAbility spokesperson.

ResponsAbility has been readying a fund of funds strategy to deliver this mandate, with a view to acquiring additional mandates, the spokesperson said. This week, the firm named Ralph Keitel as its first head of fund of funds. Keitel joins from the UN-backed International Finance Corporation, where he was a principal investment officer and head of Asia. But Keitel’s fund of funds strategy has been put on hold while ResponsAbility awaits a judgement from the Federal Administrative Court, the spokesperson said.

SIFEM and Obviam did not respond to requests for comment by the time of publication. BlueOrchard declined to comment.