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Designing and building private market impact portfolios

We are pleased to contribute to Evercore’s 2024 edition of State of the Market

Private impact strategies raised c.€72 billion across 2022 and 2023 in what was a record two years for impact fundraising globally. In 2022 TPG Rise Climate raised over €7 billion from more than 500 investors. Impact investing in private markets is now statistically relevant within private markets; yet for most allocators, it remains niche and (relatively) unconsidered.

Impact investing is investing with the intent to contribute to measurable social or environmental impact alongside a financial return. Applying this at a portfolio level means explicitly having dual asset allocation objectives: financial and real-world impact. Increasingly, institutional investors and asset owners are considering this approach for a portion of their portfolio and it’s something we’ve been helping clients implement.

What has become clear to us on our journey with impact investing is that private capital is not a “nice-to-have” – it is a necessity. Public spending cannot solve today’s challenges in isolation; private capital must be mobilised. What is equally clear is that to mobilise institutional capital toward impact at scale, investment strategies must do so without trading risk-return for impact. All three must come together in one approach.

Reflecting on the innovation curve for impact investing, the goal must be to move adoption further still, beyond Early Adopters and towards the mainstream majority. That is certainly our intention. By sharing our perspectives about looking beyond the specific product of investment and taking a holistic and deliberate impact approach, we hope that these will help allocators think through how to deliver private impact portfolios at scale, such that they too might join us and many of our clients on this crusade.