Sub line update
Waterland Private Equity, a European mid-market outfit, has joined the cadre of PE firms with ESG-linked subscription credit facilities. Other recent firms in the club include Nordic Capital and AlpInvest. Here’s what we know:
- It’s an equity bridge facility of €500 million linked to the firm’s €2.5 billion Fund VIII.
- The facility is governed by a set of key performance indicators. As usual, specific KPIs are not identified. However, according to a statement by the firm, one of the KPIs is tied to the management company and the others “reflect Waterland’s strategy to have portfolio companies strive to have a positive impact on [ESG]”.
- Lenders are Natixis, Rabobank and ABN Amro.
- ABN AMRO said: “This is an increasingly common feature of our new subscription finance transactions.”
- Rabobank said: “We are rapidly moving towards a world wherein all finance is linked to sustainability in one way or another.”
Faith in impact
The Church of England’s £8.7 billion ($12.3 billion; €10.1 billion) endowment fund is upping the ante when it comes to diversity. Says impact investment analyst Aaron Pinnock: “We are currently awaiting investment committee sign-off to include minimum diversity standards to be applied to all managers we work with. We need to see diversity of thought in an investment team.” The comment was part of a wide-ranging discussion with New Private Markets on the virtual sidelines of the Impact Investor Forum last week.
Other points of note for prospective investment partners:
- “We want to see a clear governance structure: whether there is an ESG or impact committee that actually meets and is led by someone senior in the firm.”
- “Reporting and assurance against a baseline… if that can be externally assured, then all the better.”
- “We don’t want to see an ‘off the shelf’ policy or impact approach or just a rainbow of SDGs on a screen. That is meaningless.”
By the numbers
LGT Capital Partners, like some other fund investors, assesses its managers’ ESG maturity and publishes the aggregated results annually. This year the firm noted that 28 percent of its PE managers were actively measuring the greenhouse gas emissions of their portfolio companies and that 22 percent were reporting on “climate change metrics”. Writes LGT: “We anticipate that the proportion of managers reporting will increase over time, as processes for measuring climate change risks improve and industry-wide standards continue to develop.”
Great to see that among the movers and shakers on affiliate publication Private Equity International‘s 40 under 40: Future Leaders of Private Equity list (subscription or registration required), there are two influential ESG heads: PAI Partners’ Cornelia Gomez and Partners Group’s Carmela Mondino. Here are some extracts from the full write-up:
- Gomez, 32, spearheads PAI’s ESG practice, helping to ingrain ESG in the firm’s values and deal process. She has created a tailored approach to support the specific ESG needs of each portfolio company and developed ESG Labs, a series of interactive workshops for investors that has since been transformed into a virtual ecosystem through the launch of a dedicated microsite. She is a member of multiple industry bodies, such as the UN PRI’s Plastic Investor Working Group and the steering committee of France Invest’s ESG commission. Last year, she was appointed as the global co-ordinator for Initiative Climat International.
- Mondino, 33, was promoted to head of ESG and sustainability at Partners Group last year. In addition to leading ESG integration and helping portfolio companies enhance their ESG credentials, she has been involved in some notable initiatives. This includes overseeing the development and distribution of the Portfolio Employee Support Fund, designed to aid portfolio company staff impacted by covid-19, and playing a key role in the development of the firm’s impact-at-scale strategy, PG LIFE. Mondino is also responsible for rolling out diversity and inclusion strategies at Partners Group’s portfolio companies. She sits on the firm’s D&I committee, as well as on the committees for PG LIFE and for Partners Group’s employee foundation, PG Impact Verein.
Arcano (part 2)
In Tuesday’s letter we noted a €200 million impact fundraise for Spanish fund investor Arcano. Here is some further detail from PEI senior reporter Rod James: “AIPEF has made commitments to two Europe-focused generalist impact funds and a $1 billion US healthcare life sciences vehicle that invests in businesses at the crossroads of technology and biotechnology.” Read more here.