Impact credit funds grow in popularity
Impact credit funds are on the rise, as investors demand more substance in their portfolios.
A number of new impact credit funds are set to launch in the coming months, with each fund expected to raise hundreds of millions of dollars from institutional and high-net-worth investors.
“We see three megatrends shaping fast-growing emerging markets today: demographics, digitalisation and decarbonisation,” said Philipp Mueller, chief executive at BlueOrchard.
“These developments are accompanied by significant capital needs and investment opportunities, which our regional teams are seeing first-hand. We are excited to have launched an investment strategy that captures these opportunities, fills a gap in terms of both funding and impact, and complements our investment platform.”
Soon after, it was reported that Avenue Capital is planning to launch a new fund targeting private credit investments which have an environmental impact. Avenue is said to be in talks to invest between $600m (£515m) and $800m for the fund, ahead of a launch in early 2024.
Earlier this year, impact investment adviser Phenix Capital Group reported that private debt impact funds have raised €45bn (£38.56bn) in total capital, but this figure is expected to rise sharply as more funds enter the space. The firm noted that there were 19 private debt impact fund launches in the pipeline as of July 2023.
And according to a recent report from Allianz Global Investors on impact credit funds, inequality, climate change and Covid-19 are among the driving forces behind rising investor interest in impact investing.
Read more: BNP Paribas launches climate impact infrastructure debt fund
“Impact investing goes beyond an environmental, social and governance approach by focusing investment only on companies generating lasting material positive change,” the report said.
“Challenging the consensus view that impact investments are only possible via equity, interest is growing in impact credit as an innovative, targeted, and effective response to big global issues, including climate change.
“Fund managers channel investment only to those businesses or projects delivering positive and measurable change to society and the environment, as well as financial returns. And while ESG has gained most traction as a framework for change among listed companies, impact investing has the potential for a wider reach – to businesses outside public markets.”
