Private Equity with impact

Growing popularity of private equity in impact investing
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Private equity remains the most popular asset class for impact-conscious investors.
With the arrival of new players, greater transparency on impact and more rigorous reporting are becoming crucial to distinguish truly impact-driven investment strategies from those that are not.

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Growing trend towards impact investing in private equity

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Private equity investors are increasingly adopting impact-oriented strategies, reflecting a significant shift from impact investing, once considered a niche, to a dominant force.

This trend is reflected in the growing scale and volume of impact investment in private equity.

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Growing presence of major players in impact investing

Major private equity firms are now launching impact investment funds, reflecting institutional capital's growing interest in impact.
Recent examples include KKR's raising of nearly $2 billion for its second impact fund, and the successful closing of TPG's Rise Climate Fund at $7.3 billion. In addition, acquisitions of impact investment specialists by major players are reinforcing this momentum.

Evolution of impact investing: from social to environmental and vice versa

Impact investing was initially focused on social objectives, sometimes to the detriment of financial returns.
However, the climate agenda has now taken center stage in impact investing, leading to an increase in climate-related transactions in the private equity sector. This development reflects a growing awareness of the interconnection between environmental and social issues.

Structured impact management and emerging standardization

Private equity investors are becoming increasingly sophisticated in their approach to impact management, with growing structuring and the emergence of standards in impact assessment.
This translates into greater involvement of sustainability professionals at every stage of the investment process, as well as the search for certifications or audits to validate impact claims.

Innovative financial structures for greater impact.

Some private equity players are introducing innovative financial structures linking pay-for-performance to impact results, demonstrating their commitment to impact. However, concerns remain that such approaches may be counter-productive to the growth of impact investing, as they could be perceived as diverting attention from financial returns.

Growing reputation and seriousness of impact investing in private equity

While some may see the private equity industry's adoption of "impact" as a mere rebranding of traditional strategies, many smaller funds are seeing signs that the big players are getting serious about impact investing. While it's still too early to say that impact investing is changing the reputation of the entire private equity industry, it is clear that major players are investing heavily in this approach and taking it seriously.