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Phenix Capital: Private equity remains favoured asset class for impact investors

Published: 11 March 2024

Private equity funds remain the biggest contributor of impact capital, with €158bn committed between 2015 and 2023, despite a tough market environment.

SDG3 – Good Health & Wellbeing – has emerged as the most popular theme with both impact fund managers and investors | Gam1983 on iStock

Private equity continues to attract the largest proportion of impact investments, according to the latest sector report by Amsterdam-based consultancy Phenix Capital Group.

Forty-eight percent of the 2,200 impact in Phenix Capital’s database are private equity investment vehicles, down from 54% last year. 

Since 2015, the number of private equity impact funds in the database has more than trebled to 1,258. Sixty-one percent of private equity impact funds are focused on venture capital. There is some €84bn of available equity in the impact funds market open for investment.

“In 2023, private equity as an asset class remained under pressure with fund raising, deal activity and performance stymied by a host of factors, including high interest rates and an IPO market in the doldrums,” Phenix said in its report.

“This landscape was reflected within the private equity impact fund universe with the lowest number of funds added to the Phenix Impact Database since 2015.”

SDG3 most popular theme

Out of the 17 UN’s Sustainable Development Goals (SDGs), SDG 3 – good health and wellbeing – has emerged as the most popular theme with both fund managers and investors.

“One of the reasons for healthcare’s popularity, particularly in the developed world, is that it is more recession-proof than other investment themes and also ticks the box of innovation and technology,” Phenix said.

The second most popular impact theme was SDG 9 – industry, innovation and infrastructure – with funds committed to advanced technologies, lower carbon emissions and increased mobile broadband access. 

SDG2 – zero hunger – was the third most popular investment theme among funds in its database, according to Phenix Capital.

Philips Foundation

The report includes insights from impact investors, including the Philips Foundation whose mission is to reduce healthcare inequality.

“We firmly believe that equity in healthcare cannot be achieved if we leave people dependent on donations and charity, knowing there is no consistent donor base,” Margot Cooijmans, director of Philips Foundation Impact Investments, said in the report. 

“So, after a few years, we decided to spend our limited annual budget more efficiently so that it could truly make impact, and, we wanted to align the activities with the new focus of Philips as a healthcare technology company.”

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