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Mirova joins impact-linked-carry crew

The asset manager has staked 50% of the carried interest from its €300m debut private equity fund on achieving impact goals.

Mirova, a sustainability-focused asset manager, will only get half of its carried interest if it doesn’t hit impact targets with its newly launched fund.

The firm announced the launch of the Mirova Environment Acceleration Capital fund on Wednesday. The fund, which has a target size of €300 million, will provide “acceleration capital” to businesses “with virtuous, environmentally-positive business models”, the firm said.

Candidates for the fund’s capital would be companies that: directly address at least one SDG in their business model; have “mature” technology and a proven business model; be at or near profitability; and will use the proceeds of an investment to accelerate growth.

Paris-based Mirova is a certified B Corp. While this is the firm’s debut impact private equity fund, it has other unlisted strategies with a sustainable edge. Its Energy Transition Infrastructure unit is on its fifth vintage fund with €1.5 billion under management, and its Natural Capital unit manages “several funds” totalling €500 million, said a spokesperson for the firm.

The Environment Acceleration Capital fund has already had a technical first close on €30 million of Mirova’s capital. It has already made two investments: one in Ombrea, a Provencal maker of “agrivoltaic parasols”, and one in Agronutris, which creates animal feed from insects, based near Toulouse. Two more will be announced shortly, the spokesperson added.

If the fund generates carried interest for Mirova, then 50 percent of that will be subject of the achievement of impact targets. “For each investment we define an impact plan parallel to the business plan. The impact plan is validated by an independent impact committee,” said the spokesperson. “At exit, we commission an independent impact due diligence; the impact committee compares the impact achieved with the plan and we impact the carried interest up to 50 percent.”

In pegging its carried interest to impact targets, Mirova is joining a small, but growing, cohort of general partners.