Robeco Alternative Investments, the Dutch asset management group, has launched a new fund-of-funds to invest in sustainable opportunities. Robeco Sustainable Private Equity has a target of $200m; both Robeco and Rabobank, the group’s parent bank, will act as cornerstone investors in the fund committing up to the equivalent of €35m to the fund. Robeco manages total assets of almost €110bn, including Robeco Global Private Equity, a fund-of-funds vehicle raised in 2001.
The sustainable fund aims to generate a long-term absolute net IRR that is at least as high as the return on traditional or non-sustainable ways of private equity investments. Robeco believes that through improved risk management and capitalising on social and environmental development opportunities the fund could produce returns that are higher than average.
The fund will be diversified by investment stage, geography, sector, technology and time but will apply sustainable investment criteria to the selection of its commitments. It will contribute to dedicated sustainable private equity funds and mainstream private equity funds with a sustainable edge, as well as committing to direct co-investments in sustainable businesses and sustainable project financing transactions.
Investments will be judged on two sets of criteria to ensure sustainability. First, a number of industry sectors will be excluded from the fund’s portfolio; weapons, fur, tobacco, alcoholic beverages, adult entertainment and gambling. Then investment opportunities will be assessed according to their sustainability merits, such as the social, environmental and financial benefits.
Robeco Alternative Investments will manage the fund with advice from experienced professionals in Rabobank’s sustainability and social innovation department. The Swiss group, Sustainable Asset Management, rated Rabobank in the top category for sustainability performance in 2003.