Wealth managers are beginning to channel client money towards private markets impact.
Credit Suisse has launched two private equity impact vehicles for its wealthy clients this year. In May it closed a climate innovation fund of funds at £318 million ($429 million; €377 million). Last month, it partnered with BlackRock to launch a health and wellbeing fund, which will make direct private equity investments. Credit Suisse and BlackRock are planning to launch additional impact funds in this partnership.
“Private markets – specifically early-stage private equity – is seen [by wealth clients] as the most natural way to create impact,” James Gifford, head of impact advisory at Credit Suisse, tells New Private Markets. “Clients have become more aware of the societal challenges and see the benefit of doing well by doing good.”
BMO Global Asset Management, a $273 billion-AUM asset manager, is seeking to raise €200 million for the Castle Mount Impact Partners fund, which launched earlier this month. CMIPF will co-invest with other impact and generalist private equity managers into growth companies along three themes: environmental sustainability, health and wellbeing and equality and inclusion.
One hurdle BMO faces is that “there are currently few dedicated impact investors with proven track records”, says Andrew Carnwath, private equity director at BMO. “We will also invest with generalist private equity managers with strong track records who are keen to learn about impact investing.” He says the firm will conduct impact and responsible investment due diligence to ensure managers are aligned with BMO’s impact mandate.
A total of 50 percent of wealth managers integrate impact considerations into wealth clients’ portfolios, found a survey by bfinance that was released in September.
Time Partners, a private markets-focused wealth advisory firm, sees “increasing awareness of the benefits of impact investing” among its clients, says William Gilmore, managing director at the firm. “In multi-generational families, the younger generation is more informed and there’s greater debate about trying to make a positive difference.”
Time Partners builds individual private markets portfolios for clients and sources externally-managed impact funds to match client demand. The firm has no plans to launch a collective impact fund for clients, says Gilmore: “Each of our clients is different; it’s very hard to generalise. The weighting that they place on impact varies client by client. It’s too early to see any consistency among what clients want.”
EQ Investors, a sustainability-focused wealth manager that typically invests in public markets, invested in a publicly traded fund, the London-listed Schroder BSC Social Impact Trust in February, as a way to access private markets investments. “Private markets would be great – it’s where you can have the most additionality for impact. But it just doesn’t have the liquidity our wealth clients need,” says Louisiana Salge, senior sustainability specialist at EQ.