News: Golding enters impact market with €300m global private equity fund

13/10/2022

Press Release - 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 ecological 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 renewable energies and resource efficiencies (35 per cent), sustainable agricultural technology (35 per cent), and financial services and other sustainable sectors (30 per cent). Golding forecasts a net IRR of 12 to 14 per cent and plans to raise €300m for the fund.

The Munich-based asset manager has initially classified its new impact fund conservatively under Article 8+ of the Sustainable Finance Disclosure Regulation (SDFR), as "light green plus" in other words, 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", said Dr Andreas Nilsson, Managing Director and Head of Impact at Golding.

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 village power systems, 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, cashless 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 €5 million.