ABN Amro launches €425m Sustainable Impact Fund

ABN Amro itself is the sole LP in the fund and the firm did not use any external advisers. The vehicle has an evergreen structure and will generally hold investments for five to seven years.

The fund has a team of 10, headed by Frederik Deutman and Mirna Geense.

The three core themes of the fund are energy, the circular economy and social impact.

The fund aims to deliver both financial and measurable environmental, social and corporate governance (ESG) returns, Deutman told Unquote. "We believe you can have a marketable form of returns next to sustainable returns. We will measure and report on the sustainable returns and their impact."

Deutman added that the launch of the fund is a natural progression in its sustainability and private equity investment strategies. "We have a good track record in direct investments in private equity. Last year we announced a new strategy, which led to the divestment of Maas Capital, as announced some weeks ago. Maas Capital invested in assets related to, among others, offshore, gas and oil."

The Sustainable Impact Fund will also incorporate the portfolio of ABN Amro's Energy Transition Fund, which includes smartglasses developer Envision and sustainable food transport business Foodlogica. "Our Energy Transition Fund has been active for some years, and we are now focusing on energy transition, the circular economy and social impact in north-western Europe," said Deutman.

Investments
The fund expects to make around 25 investments and will take part in both private equity deals and syndicated venture deals. The fund will deploy €4-30m per deal for its private equity component, targeting companies with EBITDA of more than €2m. For VC investments, the fund will deploy €500,000-4m, focusing on companies with revenues of more than €1m and a proven concept.

The fund is expected to be fully deployed within five years. It will focus on companies based in the Netherlands, as well as neighbouring countries.

"We think some VC investments will be rolled on into the PE part of the strategy, but that will take up to five years," Deutman told Unquote. "We will only take minority investments for our VC deals, typically alongside other investors. For the PE part, we can do majority deals as well, and we already have minority and majority positions in our portfolio."

Under the social component of its strategy, the fund will target fair chain development, social inclusion, and health and wellbeing, with 10 further sub-sectors under these categories. The circular component will focus on companies involved with material/resource recovery, circular inputs, produce as a service, and biodiversity. The fund will focus on energy investments under the renewable enery chain, as well as clean mobility and energy efficiency.

Concrete ESG reporting for each portfolio company is a core part of the fund and is something that ABN Amro has done for previous sustainability-focused strategies, Deutman said. "We will define KPIs for each investment, which we will score and track during the investment period as part of the fund reporting," he told Unquote.

Deutman emphasised the importance of setting appropriate and measurable targets: "We will look at material KPIs and we will not take a one-size-fits-all approach. For some portfolio companies, it will be about CO2 reduction; for some it will be to do with water; for some it will be diversity-related. We need to make sure that the KPIs are related to what is relevant and measurable by management, as we have done in the past."

As the interest in ESG grows – as well as the pressure for asset managers to show their commitment to it – Deutman expects that ABN Amro's peers could also launch similar sustsinability-focused strategies. "Sustainability is a hot topic at the moment and the transitions we are investing in are getting more important, so there will be a continuous flow of capital in these sectors. Increasing opportunities will attract other investors."

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