Phenix Capital Group has released its Impact Report on Private Debt, revealing that 319 funds target private debt and more than €43 billion has been committed towards private debt funds since 2015. In this report, private debt is defined as the investment of debt instruments to companies, that can range in size and scale and be implemented in different forms such as via direct lending, mezzanine, and or microcredit.
Key report takeaways
- Historically, private debt funds have targeted more emerging markets (68.87%) than developed markets (25.79%) and global markets (5.35%).
- Historically, private debt is the fourth most targeted asset class by impact fund managers listed in the database, whereas when looking at currently fundraising impact funds it is in third place.
- Historically, Financial Inclusion is the leading impact theme with more historical capital commitments (around €20 billion in historical capital commitments).
- Currently, Financial Inclusion remains in the lead followed by Sustainable Agriculture and Farming, Transition to Renewable Energy and Gender Lens.
- Historically, and currently, SDG 1 (No Poverty) is the most targeted by private debt funds (around €22 billion in historical capital commitments). Currently, it is followed by SDG 7 (Affordable and Clean Energy) and SDG 2 (Zero Hunger).
In the interview section, Symbiotics, a pure impact fund manager, shares its impact investment strategy rationale and how they work within different emerging countries. Moreover, Privium Fund Management shares its new private debt strategy and what it entails. At last, Community Investment Management shares their impact mandate rationale across the globe and engagement strategy.
“I very much believe that impact investments, in a suitable structure, should be accessible to as many investors as possible to have the biggest effect”, says Jenny Overman, CFA, CAIA, Associate Director at Privium.
“While closed-end non-listed is the de facto structure, we’ve had to pass on multiple very interesting strategies that could have worked in a closed-end exchange-listed fund as well”, she tells.
“Our approach is to stay engaged and grow with our fintech partners, aiming to support their development as contributors to economic and social value in the communities they serve. Our investment diligence process considers how our capital may help sustain lenders’ social impact beyond the life of the credit facility”, shares the Managing Partner at Community Investment Management, Jacob Haar.
Symbiotics also gave us an interview. So far, they have structured and originated 6,500 deals for over 520 companies in almost 100 emerging and frontier markets representing USD 6.5 billion.
“Our approach has always been to provide traditionally underserved businesses increased access to capital and financial services. We do this by offering investment solutions that connect socially responsible investors to micro, small and medium enterprises and value chain development projects in low-income economies”, explains their Head of Asset Management, David Grimaud.
Grimaud highlights that “emerging and frontier markets are inhabited by around 80% of the world population, they grow around twice as fast as developed markets and are undergoing a structural shift that creates a major investment opportunity pool”.