Sweden’s EQT Says New Impact Fund to Target $4.65 Billion

(Bloomberg) --

EQT AB, one of Europe’s biggest private equity firms, is creating an impact fund that will target longer-term investments in mature companies, as part of a broader strategy to impose environmental, social and governance strategies across its portfolios.

The EQT Future fund will have a target size of 4 billion euros ($4.65 billion), though no hard cap has been set, according to a statement by the Stockholm-based firm on Wednesday. 

The fund will only invest in companies that feed into a “clear impact thesis,” EQT said. The overarching goal is to ensure portfolio companies cut emissions, improve employee wellbeing and support gender diversity. Up to 20% of EQT Future’s total carried interest will be linked to achieving the portfolio-level key performance indicators, it said.

EQT’s chief executive, Christian Sinding, called the new fund “an important strategic move for EQT as a firm.” The announcement comes as the financial industry tries to position itself for a world increasingly focused on climate change and social justice. In the lead-up to COP26 climate talks in Glasgow, Scotland, a growing number of banks and asset managers are seizing the moment to announce their commitments to sustainable finance. But scientists warn that time is running out with capital allocations to date failing to rein in toxic CO2 emissions. 

EQT’s new impact fund will be overseen by Paul Polman, the former chief executive of Unilever, and Jacob Wallenberg, the chairman of Investor AB, who will co-chair the EQT Future Mission Board.

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