Dutch bank ABN AMRO has launched a €10 million social impact fund as it seeks to become involved in what it calls a ‘relatively young market’.
The ‘Social Impact Fonds’, which will be led by Eric Buckens, will initially invest in approximately 15 social enterprises in the next few years, Buckens told Private Equity International. “In the private equity sector that may seem quite small but in the social impact investing space it is a reasonable amount. The social impact market is relatively young and as a bank we want to be a part of this,” he said.
The fund will back businesses which have the intention to achieve certain societal goals on a profitable basis. “We want to make a return on the investment, but also improve the market for social impact investing by being actively involved in this space,” he said.
The fund won’t invest in start-ups, but in small and mid-sized businesses with a proven track-record. ABN AMRO aims to have made two or three investments by the summer. “Companies we may invest in could include businesses that improve access to the job market for certain groups in society. There is for example a Dutch beer brewing business that specifically employs staff with learning disabilities. But we can also invest in businesses which have created a certain technology, for instance in the water management area, that can be exported to developing countries,” he said.
We want to make a return on the investment, but also improve the market for social impact investing by being actively involved in this space
After investing the fund in the next two or three years, ABN AMRO will “assess whether it will develop a structure in which customers can participate in this fund, but we first want to see how the market develops,” Buckens added.
ABN AMRO has been watching the market closely in recent years, particularly in the Anglo-Saxon world where social impact investing appears to have a bit more momentum, according to Buckens. Indeed, Sir Ronald Cohen’s Bridges Ventures, the UK-based social investment group, celebrated its tenth birthday recently. “In the past, government agencies would often play a role, but due to a shrinking government in the UK, there is more room for social impact businesses”, Buckens said, indicating that this is now also happing in Holland.
However, measuring social returns is not easy, Buckens admitted. “But we want to make the social impact tangible. We will discuss with the entrepreneurs what they want to achieve and how we can deliver that in a year or a couple of years' time,” he said.
ABN AMRO is not the only Dutch player that is considering factoring in social returns. Earlier this year, two former Robeco executives, set up MKB Multifunds I, a €100 million Dutch fund of funds with a strong focus on environmental, social and governance issues (ESG). Ad van den Ouweland and Peter Verleun will build a portfolio of 10 to 15 funds focused on investments in the Dutch SME segment. Both financial and societal impact will be factored into the GP’s reward calculation, they told PEI last month.