The term “impact investing” in its current connotation, was coined during a Rockefeller Foundation conference in 2007. A year earlier, the United Nations launched its Principles of Responsible Investing (PRI), with 100 signatories. Yet it took another decade for the “impact-at-scale” business to launch properly. This space is characterized by the following:
In 2016, Bain Capital launched Bain Capital Double Impact (BCDI), which closed at $390m, and TPG launched its first Rise Fund, which raised $2bn. Each started investing in 2017. KKR closed its first Global Impact Fund at $1bn in August 2019, and as of January 2020 had made five investments. Partners Group is underway with fundraising against a $750m target, and Apollo in August 2019 announced a plan to raise $1bn. Blackstone and Carlyle each hired a head of impact in mid-2019.
What is the significance of these funds and firms? In the context of a private equity industry that took in $778bn inflows in 2018, these sums are still tiny. But next to the fund sizes previously seen in impact investing, they are enormous. The Global Impact Investing Institute (GIIN) published a report in April 2019 that estimated, for the first time, the size of the global impact investing market. It put the total AUM in the space at $502bn, but one of its most striking findings was how fragmented the space still is. Over 1,340 entities were counted in the space, and the median fund size was $29m, with, to state the obvious, 670 entities investing even less.
