Ambienta plans asset class expansion following EUR 1.55bn Fund IV close

Ambienta IV was launched in February 2022 and the final close also marks the fund’s first close, Nino Tronchetti Provera, founder and managing partner at Ambienta, told Unquote.

Campbell Lutyens acted as global placement agent for the fundraise, while Goodwin Procter and McDermott Will & Emery acted as legal advisers.

Ambienta IV is 2.5x the size of its predecessor vehicle, which held a final close in 2018 on its hard-cap of EUR 635m, surpassing its EUR 500m target. 

In deciding to raise a larger fund, the GP took into account the market opportunity and the size of deals it intends to target, according to Provera. “Environmental sustainability is shaping the entire economy – this is the biggest revolution the world economy has ever experienced and our team is spotting new environmental trends every day,” he said. “This of course increases the investable area that we can target.”

“We have decided to keep doing what we have done for the last 15 years, focusing on privately held European mid-cap sustainable champions, but we will also focus on what has been the most successful part of Fund III: deals in the EUR 90m-EUR 100m equity ticket range, which we achieve by buying a single company or by building platforms,” he added.

“The question people should ask us is, if we had such extraordinary demand, and we don’t have many limits in terms of the investible arena as sustainability is everywhere, why didn’t we raise a bigger fund? But it’s about discipline,” Provera said. “It would be criminal to jeopardise our unique position by growing the fund size too quickly.”

Ambienta III is now 80% deployed and Ambienta IV is expected to make its first deals at the start of 2023, Provera said.

The GP’s future plans include the expansion of the asset classes in which it operates, Provera told Unquote. “We structured the first hedge fund in the world focused on environmental sustainability, and we now manage other products in our public equity arm, AmbientaX,” he said. “In the future, we will enter new asset classes, and we are aiming to cover most asset classes in time. We want to apply environmental sustainability trends to as many asset classes and geographies as possible, and we are executing on this with a very disciplined path.”

Ambienta IV is an Article 9 fund within the SFDR, although Ambienta is focused on sustainability-based actions and value creation rather than reporting, Provera said. “We only focus on environmental champions that have found a way to deliver a product or a service in a way that is resource-efficient and pollution-controlled in comparison with the rest of the industry, so by definition, we deliver impact,” he said. We apply our ESG in Action methodology for every investment, so in terms of how we run our business, the SFDR does not change anything at all – it just changes the reporting.”

The drive for sustainability, ESG and impact in private equity investing is drawing an increasing number of investors to the space in which Ambienta operates. “I welcome interest in the sector from generalists as the issues we are trying to tackle are becoming bigger every day, as we have seen with the heatwave in Europe,” Provera said. “The more people deploy for these issues, the better it will be. A lot of that money might not be invested in the real issues initially, but it will change progressively, and LPs will screen between authenticity and greenwashing.”

Investors
The LP base comprises pension funds, insurance companies, sovereign wealth funds, banks, endowments, foundations, funds-of-funds and family offices, according to a statement. Around 55% of the fund’s LPs are from EU countries, with 20% from other European countries, and the remainder from the US, Canada, South America and Asia.

LPs in Ambienta III include Capital Dynamics, the European Investment Fund and Italian pension fund CNPADC, according to Unquote Data.

“We had interest from existing investors that was almost able to cover the entire fund, plus interest from potential investors that could have covered the fund many times over,” Provera told Unquote. “We focused on around 140 investors that represented around EUR 5bn in potential commitments and progressively screened them.”

This screening was carried out based on three categories, Provera said, starting with geography. “We didn’t have any Asian LPs before, we wanted to get some on board, and now they are more than 10% of the fund,” he told Unquote. “Our second priority was that a few historical foundation, family office and pension fund environmental pioneers were not with us already, and they are now on board. We also wanted LPs who not only invest in PE, but also other asset classes, with a platform approach.”

Investments
Ambienta IV will continue the strategy of its predecessor vehicles, acquiring mid-cap European companies that are focused on delivering positive environmental transformation and sustsinability. The GP has historically acquired companies in a range of sectors, including industrials, technology and consumer.

The fund will invest equity tickets of EUR 50m-EUR 150m, generally focusing on deals requiring tickets of EUR 90m-EUR 100m, whereas Ambienta III deployed tickets of EUR 30m-EUR 100m. The vehicle expects to make 13-14 platform deals, Provera said.

Add-ons represented around a third of the deployment volume of Ambienta III and Ambienta intends to continue to grow its companies via buy-and-build, focusing on international expansion. “Historically we have invested 50% in Italy and 50% abroad, but where companies are headquartered is not as important for us,” Provera said of the fund’s geographical focus. Because of our platform concept, our companies have operations in several countries, and our most important value creation path is globalisation.”

Ambienta’s portfolio companies generated revenues in 148 countries in 2021 and it manages 80 factories across four continents via its portfolio, he added.

“Having said that, we are growing our international offices, so the pan-European footprint is important,” Provera said. “We have offices in France, Germany, Italy, and London, but we need to complete our presence in Europe and will do this in the context of this fund.”

Examples of Ambienta's recent deals include its acquisition of France-based green space developer Cap Vert Développement. Earlier this week, the GP announced that platform investment Impact, a developer of cardboard packaging, had acquired Germany-based market peer HolwegWeber.

People
Ambienta – Nino Tronchetti Provera (founder, managing partner).

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