In 2017, UBS committed to raising $5 billion for the United Nations’ Sustainable Development Goals (SDG)-related impact investments over five years. And this week, UBS announced it has raised $225 million from its private clients for the $1 billion KKR Global Impact Fund as part of that five-year plan to mobilize private wealth for public good.
The KKR fund invests in businesses providing commercial solutions that contribute measurable progress toward one or more of the Sustainable Development Goals (SDG). The fund is focused on opportunities where financial performance and societal impact are intrinsically aligned and there is no trade-off between positive impact and financial outcomes.
In an interview last week, Andrew Lee, head of sustainable and impact investing in the Americas for UBS Global Wealth Management, said that over the past few years, “clients have shown increasing interest in how [socially responsible investing] can be incorporated into their investments.”
Lee said that impact investing is the “most intentional” of ESG investment strategies because it seeks to have a “measurable impact from an environmental or societal perspective.” Many such investment options have fallen into the private market, including growth capital and venture capital. These are less liquid and require longer investment timeframes in order to effectively measure outcomes.
Jake Elmhirst, head of private markets solutions for UBS Global Wealth Management, said in the interview that UBS recommends only impact investments that yield good-quality returns. “We don’t compromise on return just because it’s an impact investment,” he said.
UBS chose KKR for its competitive advantages over mid-market firms, such as approximately 190 employees who are dedicated to sourcing and analyzing private equity opportunities. “Its spread in terms of geographic coverage is very broad,” Elmhirst said.
In addition, KKR has been around since 1976 and has many dedicated capital markets team executives, giving it the ability to “find the best exit solution.” KKR’s Capstone in-house consulting firm boasts 70 professionals, he added.
The private equity firm invested heavily into the fund, so "they are eating their own cooking.”
And most of KKR’s team, he said, has been with the company long term; “it's not as if they plucked the team out of the air and imported it.”