Impact Investment Group (IIG) is on the hunt for $70 million from wholesale investors for a new fund targeting sustainable and socially conscious startup investments.
IIG CEO and co-fund manager Daniel Madhavan said the Impact Alternatives Fund will be a mix of investments, including renewable energy infrastructure such as solar farms, impact private equity, venture capital and debt for high-growth startups.
“We see a future where energy is 100% renewable, affordable and universally accessible. Vibrant businesses can grow while respecting the earth and contributing to our society,” he said.
“Our community of investors has already funded solar farms, green buildings, and the startup years of mission-driven businesses. We’re excited to expand our investment thesis with the launch of this new fund.”
A deal flow of early investments is already underway, with the deals expected to be in place by the end of 2020. Renewables will make up a maximum 30% of the fund, with regenerative farming also capped at 30%, and impact private debt making up to 40%. Social impact bonds, environmental assets and VC investment are each capped at a maximum of the 20% of the Impact Alternatives Fund.
Madhavan said the Impact Alternatives Fund will suit the times.
“Investors want social and environmental benefits alongside attractive returns, and smart advisors are looking for ways to diversify portfolios away from public equities and bonds. This fund ticks both of those boxes,” he said.
“We want to show that finance can be a force for good and we work in the context of broader visions.”
The Impact Alternatives Fund has a return objective of 6-10% annually pre-tax, post fees and costs, with an annual income yield objective of 3-5%, distributed quarterly. Unitholders must be wholesale clients, with a minimum investment of $100,000.
IIG has more than 500 investors with $650 million in funds under management. Impact investments make up just 1% of total funds under management in Australia, worth around $19 billion.
In February, before Covid-19 hit, ASX-listed asset manager Moelis bought Byron Bay’s Beach Hotel for $104 million – the first pub deal worth more than $100m – from IIG, which bought the famed holtel, previously owned by John “Strop” Cornell, in 2017, for $70 million.
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