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UBS capitalises on private wealth clients’ appetite for impact

The manager has raised $325m from its clients for TPG’s $2bn impact fund, The Rise Fund.

Capitalising on an increase in demand among its private wealth clients for impact investments, UBS has raised $325 million for The Rise Fund, TPG Growth's $2 billion global impact fund.

The sum raised is the largest commitment in the vehicle, which pursues investments with measurable positive social impact and competitive returns in the information, education, finance, energy, agriculture, infrastructure and healthcare sectors.

It is unclear how much has been raised for the vehicle so far. New Mexico State Investment Council and AP2, the second Swedish national pension fund, have also made commitments to The Rise Fund, according to PEI data.

TPG declined to comment on fundraising.

The Rise Fund was co-founded by Bill McGlashan, the founder and managing partner of TPG's $8 billion growth and mid-market arm, rock band U2 lead singer Bono and Jeff Skoll, a philanthropist who had been the first president of online auction house eBay.

According to Rise's website , the fund's collaborators include Virgin Group founder Richard Branson, Sudanese-British telecom entrepreneur Mo Ibrahim, DreamWorks Animation chair Mellody Hobson, non-profit advisor The Bridgespan Group, and impact-focused venture capital firm Elevar Equity. The fund was launched last year.

At the World Economic Forum annual meeting 2017 in Davos, UBS committed to raising $5 billion for impact investments related to the UN Sustainable Development Goals . Last year the bank raised $471 million for the UBS Oncology Impact Fund, an impact investing initiative aimed at developing cancer treatments which held a final close in April 2016.

Simon Smiles, chief investment officer in UBS Wealth Management's ultra-high-net-worth (UHNW) team, said last week that while UBS's UHNW clients have, on average ,a very low allocation to private equity, his team has seen much greater demand in impact investing.

“That's partly because we put a lot of effort as a bank into trying to find great investments which are also impactful, and I think we've had some success doing that. But it's also a clear increase in appetite from the clients themselves,” he said.

“Typically, when people talk about sustainable or impact investing, they'll talk about millennials. Currently millennials have $17 trillion of assets, by 2020 they'll have $24 trillion, which is almost 10 percent of global wealth. So that's an aspect, but it's clearly not the only story we're seeing. Across the client base we're seeing people increasingly looking at this space.”

Smiles said UHNW clients have primarily been accessing impact investment through dedicated private equity funds, such as the Oncology Impact Fund.

“Where we can find an attractive investment opportunity that also has impact, it tends to be unsurprisingly very attractive to clients,” Smiles said.

“What I would stress though is an unattractive investment opportunity with impact works from the philanthropy side, it doesn't work from an investment perspective. So getting something for free, if you will – a positive social impact – is where the interest is, far more than concessionary return impact investments.”

At the Emerging Markets Private Equity Association conference in Washington DC in May, McGlashan told delegates every deal in The Rise Fund needs to return at least 2.5x. He also said 65 percent of capital in the fund is institutional.

TPG has already begun investing The Rise Fund. In April the fund led a $190 million round in EverFi, a provider of subscription-based digital learning to K-12 schools, universities, corporations, sports leagues, and non-profits, while in May the vehicle made a $50 million investment in Dolda Dairy, a Hyderabad, India-based fresh dairy product provider.

UBS's private wealth businesses has around $2.2 trillion under management.