Listed UK asset manager Schroders is to acquire a majority stake in impact investor BlueOrchard, underscoring the growing mainstream investor interest in this extension of the ESG investing movement.
The announcement of the deal comes as return-seeking investors increasingly show interest in investments that have a positive impact on society and/or the environment.
It is thought to be the first time a large European asset manager has made such a strategic move into impact investing. In the US, Goldman Sachs Asset Management acquired impact investor Imprint Capital in 2015. Its co-founder, John Goldstein, was yesterday announced as the head of a new sustainable finance group the banking group is forming.
Mark Thomas, ESG specialist at asset management consultancy Alpha FMC, said Schroders’ move “really shows the focus and intent from bigger asset managers to enter into impact investing”.
“We expect others to react and either build their own capabilities in this space or look for opportunities to similarly bolt on capability,” he added.
“The deal is another key step in impact investing entering the mainstream and gaining traction based on investor demand. While exclusionary and inclusionary SRI and ESG integration are becoming more of a baseline standard for firms, strong impact investing propositions will likely become the battleground for differentiation in the responsible investing space.”
Founded in 2001 as a UN initiative, BlueOrchard is the world’s first commercial manager of microfinance debt investments, according to a press release.
It has around $3.5bn (€3.1bn) in assets under management across credit, private equity and infrastructure, and partners with leading global development finance institutions for blended finance mandates. It only invests in frontier and emerging markets. Major Dutch pension funds ABP and PGGM previously had investments in funds managed by BlueOrchard, but they had to pull out due to regulatory changes in the Netherlands.
Schroders said the deal would support the expansion of its “sustainability capabilities” and accelerate its growth in private debt and private equity investments in emerging markets.
Peter Harrison, group chief executive of Schroders, said: “Schroders has a strong belief in the value that investment can create in society, particularly within emerging and frontier markets. BlueOrchard’s expertise in this area is exceptional.
“They share our values, recognising that through our combined contributions, we can purposefully affect positive change. They are a blueprint for the future of our industry and we are delighted to partner together.”
Patrick Scheurle, CEO of BlueOrchard, said Schroders’ “stable ownership structure and heritage… makes them an excellent partner”.
Schroders said there would be no changes to the management team, processes or strategies that BlueOrchard manages.
Schroders’ Harrison, global head of private assets Georg Wunderlin, and Stephen Mills, executive chairman of Schroder Adveq, will be appointed to the BlueOrchard board of directors, according to the press release.
The acquisition is expected to complete by the end of the year “subject to usual closing conditions”.