A new private equity fund of funds aiming to capitalise on the growing area of sustainable investment has been launched by Robeco, the asset management division of Rabobank.
Robeco Sustainable Private Equity will apply sustainable investment criteria to its selection of a portfolio of private equity investments.
In a two-stage process, the fund will apply negative screening to rule out investments in weapons, fur, tobacco, alcoholic beverages, adult entertainment and gambling. Non-excluded investments will then be assessed on their ability to satisfy the fund’s ‘Triple-P’ criteria: People (social aspects); Planet (environmental aspects); and Profit (financial prospects).
The fund, which has a target size of $200 million (€158 million), has been launched with a €70 million cornerstone investment, comprising two €35 million investments from Robeco and parent organisation Rabobank. It has not yet set a target amount or date for a first external closing, but has already made investments in two undisclosed sustainability funds.
Robeco managing partner Ad van den Ouweland, who is spearheading the fund, said: “The integration of sustainability with private equity is a unique combination. Sustainability is getting more and more attention, and both sustainability and private equity offer long-term growth.” He added that sustainability is on the agenda of institutions around the world and that the fund gives them the opportunity to put their plans into practice. Van den Ouweland expects investors to comprise a mix of pension funds, insurance companies and banks.
Asked whether there would be a sufficient universe of funds to invest in, van den Ouweland said: “We investigated the proposition for a long time and discovered a potential investment pool of plain vanilla sustainability funds around the world. In addition, there are mainstream private equity investors that could implement sustainability strategies – some have made announcements already, and we expect more to do so in future.”
A statement released to accompany the fund’s launch says it is aiming to achieve a return “at least as high as the return on traditional or non-sustainable ways of private equity investing, but potentially higher”. Van den Ouweland claimed this was because the sustainability segment can take advantage of greater inefficiencies than are found in the private equity market as a whole.
Van den Ouweland said the size of the investment team for the fund would be ten, drawn from both Robeco and Rabobank’s Sustainability and Social Innovation division, which is acting as adviser to the fund. He expressed hope that the fund would benefit from Rabobank’s existing reputation as a bank with a strong focus on ‘green’ issues.
Robeco is one of Europe’s leading asset management firms, with almost €110 billion of assets under management. Based in Rotterdam, it provides asset management products and services to institutional and retail clients around the world. Robeco Private Equity, the firm’s existing private equity fund of funds operation, has commitments in more than 20 private equity funds, allowing indirect investment in around 500 unlisted companies.