Side Letter: Credit lines and ESG, Adams Street’s $5bn, little covid-19 impact on impact

ILPA's expanded sub credit lines guidance shines a light on illiquidity blindspots; plus Adams Street Partners' fundraising update and GIIN's latest survey. Here's today's brief, for our valued subscribers only. 

He said it

“A lot of people went into patient capital, infrastructure, sustainable [investments] and covid made an absolute nightmare of some of those areas. Think about investing in travel, energy and energy transmission with good long-holds … now [these are] absolutely disastrous. That’s making tech more attractive again.”

Jon Moulton, founder of Better Capital, on his immediate takeaways from the health crisis, at the Guernsey Finance webinar on Wednesday

They did the math

The Global Impact Investing Network has put the figure of the impact investment market at $715 billion, a more than 40 percent increase from end-2018, according to its 2020 Annual Impact Investor Survey published today. Good news for impact investors – more than half of investors are “unlikely” to change their planned commitments to impact investments this year, according to the survey.

Just happened

The great credit line debate

Fans of subscription credit lines have been treated to two noteworthy developments this week. Yesterday the Institutional Limited Partners Association published an update to its 2017 guidance on the topic which it urged GPs to provide more disclosure on the effects of credit facilities. Fund managers won’t be happy with all the recommendations, but in a more challenging market environment investors will surely welcome the extra disclosure – more on this in our weekly commentary tomorrow.

Then this morning, EQT said it had secured the world’s largest subscription credit line tied to ESG. The facility, which stands at €2.3 billion and has an upper limit of around €5 billion, is backed by a syndicate that includes BNP Paribas and Swedish bank SEB. It’s coupled with a pricing mechanism designed to incentivise the performance of portfolio companies around gender equality and renewable energy. Dutch bank ING launched the first such facility for Singaporean healthcare investor Quadria Capital in October.

Adams Street’s fundraising plans

Adams Street Partners is seeking close to $5 billion across eight funds by 2021, according to documents submitted by the firm to Ventura County Employees Retirement Association. These include a dedicated Asia fund targeting $200 million, its third venture innovation fund targeting up to $525 million and a global fund targeting $800 million that will invest across primaries, secondaries, growth equity and co-investments.


What families want. London-based multi-family office Sandaire will be doubling down on its home market as the impact of covid-19 makes looking at Asia and US more challenging, according to Michael Mowlem, who heads its PE business. The investor is also eyeing special sits and expects more secondaries opportunities near-term. More on its 2020 priorities here.

EQT on protectionism

With countries putting up greater barriers to foreign acquirers looking for bargains during the covid-19 crisis, what’s the outlook for buying opportunities in France? We put this to EQT’s new Paris-based head Nicolas Brugère yesterday who said the firm’s core investment strategy was not about trying to buy distressed companies. “For many reasons, the trend of the previous decades towards globalisation and deregulation may be somewhat coming to an end,” Brugère said. While it’s too early to assess the consequences of this, sustainability is “more important than even before”, he added.

Dig deeper

Institution: Montana Board of Investments
Headquarters: Helena, United States
AUM: $20.99 billion
Allocation to alternatives: 15.58%

Montana Board of Investments approved $110 million-worth of private equity commitments in February, according to board meeting documents released in June. The commitments included $10 million to Foundation Capital Leadership Fund II; $50 million each to Odyssey Investment Partners Fund VI and Sumeru Equity Partners Fund III.

For more information on MBI, as well as more than 5,900 other institutions, check out the PEI database.

Today’s letter was prepared by Toby Mitchenall, Adam Le, Carmela Mendoza and Alex Lynn.

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