Golding Capital Partners is driving the strategic expansion of its impact investing division and launching its first institutional impact fund of funds.
With “Golding Impact 2021” the Munich-based asset manager is pursuing a global private equity impact strategy based on environmental and social sustainability targets that are ambitious, quantifiable and integrated. The new fund will focus on companies in Europe, North America and emerging markets with transformative business models in the areas of green solutions (35 per cent), sustainable agricultural technology (35 per cent), and financial services and other sustainable sectors (30 per cent). Golding is aiming for a net IRR of 12 to 14 per cent and plans to raise EUR300 million for the fund. The Munich-based asset manager has initially classified its new impact fund conservatively under Article 8+ (light green plus) of the Sustainable Finance Disclosure Regulation (SDFR), but in the long term it is aiming for an Article 9 classification (dark green).
“Impact investing is not just the future; it already offers great opportunities for institutional investors today. Our investment decisions can bring about real, sustainable change in a global transformation process, and at the same time add a huge amount of value and so generate reasonable returns. The biggest challenge in fact is to gain access to the best target fund managers and to ensure adequate diversification at the same time. We believe that on the basis of our long track record in impact investing and with the support of our investors we can make a key contribution to achieving the UN development goals,” says Dr Andreas Nilsson, Managing Director and Head of Impact at Golding.
“We will be putting together a hand-picked portfolio of funds for our investors, made up of investments in companies with environmental or social characteristics as well as a record of sustainable growth. These investments must meet agreed impact targets from day one. As we put great emphasis on ensuring that the reporting from portfolio companies outside Europe complies 100 per cent with SDFR standards, we are starting conservatively under Article 8+ and consider ourselves to be “light green plus”. Together with our target funds we will work actively to standardise data collection and regular reporting in order to achieve Article 9 status,” adds Hubertus Theile-Ochel, Managing Partner of Golding Capital Partners.
Jeremy Golding, Founder and Managing Partner of Golding Capital Partners, says: “This first impact fund is a logical development of our long-standing sustainability philosophy and a means of putting it into practice. We have been signatories of the UN PRI since 2013 and the Operating Principles of Impact Management will follow soon. It is just one step of the many that we still have ahead of us as a company on our way to becoming a sustainable asset manager. At the corporate level we have committed to becoming carbon-neutral by 2025, for example. So this will certainly not be our only impact investing product.”
Minimising risk by means of broad diversification and rigorous due diligence
The strategy for “Golding Impact 2021” is to build a broadly diversified portfolio across sectors, regions and development stages. Investments are planned in around 15 target funds, with a smaller allocation for selected co-investments. Golding applies a rigorous due diligence process before making its investment decisions, and has developed a sophisticated impact management system that explicitly defines the measurable impact objectives of each investment and so makes it possible to evaluate their performance.
The portfolio companies for Golding Impact 2021 will operate largely in three sectors, Green Solutions, Food and Ag-Tech Solutions and Financial Inclusion Solutions.
Green solutions comprise technologies and business models that contribute to decarbonising economic processes or adapting to climate change. In mature target markets this mainly relates to energy efficiency, the modernisation of energy storage and grid infrastructure, and more sustainable transport networks. In emerging economies the main aim is to decouple economic growth from the consumption of resources. Affordability and broad social access to these technologies play a vital role in the selection of investments, as with solar-hybrid mini grids, for instance.
Food and ag-tech solutions are innovative methods aimed at creating a more sustainable agriculture, forestry and food industry. They include the long-term maintenance of soil and water quality and the use of higher yielding, more resilient crops. Digitalisation can also help to make organisational structures in the agriculture industry more efficient, by enabling the shared use of capital-intensive machinery, for example, or modernising supply chain management.
Financial inclusion solutions include ways of radically simplifying access to financial services and making them available to more people in emerging markets. A lack of access to traditional banking services holds back the overall economic development of many developing countries, but on an individual level it often also makes it difficult for people to save money to tide them over in times of need. Fintech companies offer digital alternatives for areas such as insurance, mobile payments and lending.
“Golding Impact 2021” is structured as a Luxembourg SCS SICAV-FIAR and is open to institutional investors making a minimum commitment of EUR5 million.