News & Analysis

M&G’s ResponsAbility widens LP net to target largest fund yet

DFIs and other catalytic investors, which made up most of ResponsAbility's LPs in previous strategies, will form a minority subordinated first-loss tranche for this fund.

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ResponsAbility Investments will try to broaden its investor base to include more commercial institutional investors for its latest emerging markets offering. The M&G-owned firm has launched a climate debt fund focused on Asia with a €500 million target – and is seeking more than €300 million from private institutions.

For previous funds, the majority of ResponsAbility’s LPs have been development finance institutions, foundations and endowments, government and dedicated impact investors, New Private Markets‘ database shows.

The ResponsAbility Asia Climate Investment Fund has secured commitments of €80 million so far, including €58 million from Germany’s DFI KfW and a further commitment from the Netherlands’ FMO. ResponsAbility is also “close to finalising” a $100 million commitment from an institutional investor, the firm’s spokesperson told New Private Markets via email.

The majority of the fund will be deployed as senior debt, which “aligns with our primary objective of maintaining a stable and secure investment framework while maximising our impact”, the spokesperson said. There will be some capacity for “more flexible financing instruments”.

To attract institutional investors, ResponsAbility is implementing a two-tranche structure. Catalytic investors such as DFIs make up the subordinated first-loss tranche, and institutions make up the senior debt tranche. KfW’s €58 million makes up the entire first-loss tranche for the first close (see KfW’s announcement here); KfW and other investors are expected to contribute more first-loss capital ahead of a final close.

This would be ResponsAbility’s largest fund to date if it hits its target size. The firm is also marketing a multi-strategy sustainable food and agriculture fund for global emerging markets with a $300 million target, NPM understands.

Founded in 2003 and headquartered in Zurich, ResponsAbility manages funds in public and private markets and acts as the chief investment office for a handful of DFIs. Its earlier strategies focused on emerging markets microfinance and other social impact themes; it has since evolved to address climate change mitigation and resilience and energy access in emerging markets. The firm was acquired by UK-based asset manager M&G in 2021.

KfW did not respond to request for comment prior to publication.