Which firms have been voted leaders in sustainability by their peers in private markets over the last 12 months?
Every year, readers of PEI Media’s publications vote in their tens of thousands for our coveted annual awards. With ESG and sustainability becoming mainstream investment concerns, the honour rolls for Infrastructure Investor, PERE, Private Equity International and Private Debt Investor now include several awards categories for sustainably-minded firms.
The awards process: For each category, four contenders are shortlisted. The shortlisting process is based on a combination of the editorial teams’ own research and submissions from candidates. The shortlists are then put to a reader vote.
Which firms prevailed?
In the world of private equity, affiliate title Private Equity International had one category up for grabs:
Impact Investment Firm of the Year
2. Bain Capital Double Impact
3. LeapFrog Investments
TPG once again holds the trophy for this category, following its first win in 2017. It comes as no surprise – TPG’s Rise Funds delivered about $3.3 billion worth of impact through carbon reduction, access to education, reduced poverty through financial inclusion, conservation, healthcare, and community wellness programmes in fiscal 2020. Notable deals included Greenhouse Software, Rad Power Bikes, Africa Airtel and LIVEKINDLY. It also launched the Rise Climate fund in early 2021, securing $5.4 billion on its first close in July.
In private debt, Private Debt Investor honoured four responsible investors:
Responsible Investor of the Year – Global
1. Blackstone Credit
2. Tikehau Capital
3. CIFC Asset Management
The firm has grown its team of ESG-related professionals fivefold since 2019, with 14 added in 2021, including Rita Mangalick as head of ESG. Blackstone has committed more than $8 billion to renewables and climate change solutions, more than $7 billion of it in the last 24 months. The firm also partnered with a third-party consultant to implement a proprietary ESG due diligence tool for the investment team to help identify material ESG risks based on sector exposure. The tool is based on the Sustainability Accounting Standards Board framework.
Responsible Investor of the Year – Americas
2. White Oak Global Advisors
3. Antares Capital
In 2021, the firm began integrating climate change-related considerations into its credit investments. The firm developed what it described as a bespoke methodology to help investment teams systematically consider ESG issues throughout the deal process. The process aims to capture firms producing goods or services that are substantially contributing to climate change mitigation or adaptation. KKR considers the potential climate impacts and relative carbon intensity of each sector when making investments. The firm produced a Climate Action Report in November 2021.
Responsible Investor of the Year – Asia-Pacific
1. HSBC/Temasek Holdings
2. ADM Capital
The two firms launched a $150 million Singapore-based partnership to provide debt finance for sustainable infrastructure projects. Initially focusing on Southeast Asia, it backs projects addressing the challenges of climate change. The two firms hope to scale the platform up to $1 billion of loans in the next five years.
The platform is supported by the Asian Development Bank and debt financier Clifford Capital Holdings and uses internationally recognised ESG best practices to measure sustainability outcomes for the loans it provides.
Responsible Investor of the Year – Europe
1. Tikehau Capital
The firm has pioneered ESG ratchets in unitranche financing within its direct lending funds, with the firm’s fifth such fund including this mechanism in over half of its transactions.
The ratchet is core to the Impact Lending fund, one of Europe’s first impact-focused lending funds. The firm successfully placed a debut €500 million sustainable bond in March 2021. In addition, it has formed a Climate Action Centre, which convenes employees working to deploy climate-focused strategies and aims to manage €5 billion of assets by 2025, dedicated to climate and biodiversity.
Real estate-focused affiliate publication PERE also had four prizes up for grabs:
- ESG firm of the year – Global: Hines
- ESG firm of the year – North America: Blackstone
- ESG firm of the year – Europe: NREP
- ESG firm of the year – Asia-Pacific: GLP
Affiliate title Infrastructure Investor crowned a global winner:
Sustainable Investor of the Year
2. Partners Group
Here is what Infrastructure Investor‘s Tharsini Ashokan, wrote about Ardian’s win:
With more asset managers and institutional investors increasingly making sustainable infrastructure a priority, it is no easy feat standing out as the clear winner of Sustainable Investor of the Year. Thanks to the recent successful launch and first close of its clean hydrogen infrastructure fund, however, Paris-based Ardian has set itself apart in a field of environmentally-conscious contenders for the award.
Established as an impact fund in line with Article 9 of the EU’s Sustainable Finance Disclosure Regulation and intended to invest globally along the entire hydrogen value chain, the Clean H2 Infra Fund was launched in October in a 50/50 joint venture with Zurich-based clean hydrogen private investment and asset management platform FiveT Hydrogen.
Hailed as “the world’s largest clean hydrogen infrastructure investment platform” by Ardian and FiveT Hydrogen at the time of its launch, the Hy24 fund – which has a target size of €1.5 billion – started strong, securing commitments of €800 million from a global roster of early investors.
In addition to the French trio of TotalEnergies, AirLiquide and Vinci Concessions, there were US industrial companies Plug Power, Chart Industries and Baker Hughes, South Korea’s LOTTE Chemical, Groupe ADP, AXA, Ballard, EDF and Schaeffler.
According to Ardian head of infrastructure Mathias Burghardt, the timeliness of the fund’s launch was a case of preparation meeting opportunity. “We started dedicating a team on hydrogen two years ago, but then we saw an acceleration of projects, much faster than anticipated,” he told Infrastructure Investor at the time.
“It’s true that [hydrogen] is less mature than infrastructure and therefore the risk profile is very different. But I am very positively surprised by the appetite from institutional investors – pension funds, sovereign wealth funds, insurance companies – that want to be a part of it.
“I think people realise that this industry is going to grow at an incredible pace. This will be a new asset class and they want to be a first mover because they realise that with renewables, the best returns were in the beginning. I think it will become a strong asset class before 2030.”
Continuing to attract investment, the fund went on to reach a first close of €1 billion in December, thanks in part to Spain’s Enagás, Italy’s Snam and France’s GRTgaz committing €100 million to the fund via the trio’s joint initiative to invest in clean hydrogen projects. A further €100 million, which rounded out the Hy24 fund’s first close, is understood to have come from French re-insurer CCR Group, with the fund seemingly on track to reach its expected €1.8 billion hard-cap by mid-2022.
Banking on resilience
Central to the firm’s ability to stand out from other sustainable investors is its faith in the renewable energy sector’s ability to weather most storms, even one as detrimental as the pandemic.
As co-head of Ardian’s North American infrastructure fund Mark Voccola told us last year: “One thing the pandemic has done is shine a light on the importance and the resilience of energy and of renewable energy in particular. There were impacts on employees, but absent that, those energy assets and companies still worked, and they proved they could provide downside protection to investors as the economy turned down.
“That is what you would expect to see, and it is what we model, but it was good to see in practice.”
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