General Atlantic were not the only people who approached us.”

The above comment, made by Actis energy head Lucy Heintz following the announcement that the firm will become GA’s infrastructure arm, may not come as a surprise. In one sense, the deal is simply the latest example of a growing trend.

Investor demand for infrastructure has been rocketing, largely thanks to tailwinds from the energy transition and digital transformation, and the asset class’s reputation as an inflationary hedge. This, combined with LPs’ desire to allocate to fewer fund managers, has led private markets giants to view the asset class as a must-have offering, putting independent infrastructure managers in their acquisition crosshairs (see New Private Markets affiliate publication Infrastructure Investor for more on this, registration required). Actis isn’t even the largest infra firm to be bought this month; Global Infrastructure Partners, which has an AUM around eight times larger, was acquired by BlackRock just last week. Bridgepoint, owner of NPM publisher PEI Group, bought Energy Capital Partners last year.

But Actis’s appeal is not solely due to its asset class.

Sustainability is increasingly an allocation winner in private markets. In a period characterised by difficult fundraising conditions, those raising climate funds in particular have benefited from new pools of LP capital coming online and continued investor interest.

With its roots in development finance (it originated as a spinout from CDC Group, now called British International Investment) Actis has been consistently forward-thinking when it comes to sustainability since it was founded two decades ago. Though the firm itself treats the term ‘impact’ with circumspection (“we tend to say everything we do is with impact rather than labelling ourselves as impact investors”, Heintz said), Actis is a prominent brand in private markets sustainability. It was second on our Impact 50 list last year.

In a similar vein, Actis’s emerging markets expertise is becoming an increasingly attractive quality.

The need for private capital to be channeled towards emerging markets – particularly with regard to the energy transition – has become acute. The mainstream investment world has started to respond to this; at COP28 last year, private markets heavyweights such as Brookfield, TPG and BlackRock launched dedicated EM climate funds, catalysed by anchor commitments from the UAE’s $30 billion climate fund, Altérra. This scarcely scratches the surface of the opportunity; $330 billion a year is needed to deliver a green transition in South Asia, Southeast Asia and Africa, as outlined in a report by LeapFrog Investments, CGAP and Temasek last year. This is viewed as both a huge challenge and a huge opportunity.

Heintz also noted that, during the sale process, there were other firms “for whom emerging markets and the energy transition are in their sights”. Sustainability driven consolidation looks set to continue.