ImpactAlpha LP / GP

Charting fundamental shifts in private equity

ImpactAlpha · March 18, 2025

Greetings, Agents of Impact! 

Welcome to this week’s ImpactAlpha LP/GP, where we take you inside the real business of impact investing and the dynamic relationships between owners, managers and intermediaries of impact capital.

  • Are you in Miami for SuperReturn North America? Going to Washington, DC, for Impact Capital Manager’s annual convening? Let’s connect.

In this week’s newsletter:

  • At SuperReturn, dealmakers chart the future of private equity 
  • Equity-light climate tech
  • Betting on biochar, Brazil and alt-proteins in Asia

Differentiating on impact, tapping retail investors: Charting the changing private equity landscape. That rumbling you hear is the tectonic plates shifting underneath the world of private equity. “Tariffs have really thrown a monkey wrench into everything,” Randy Schwimmer of Churchill Asset Management, an affiliate of Nuveen, said at the SuperReturn private equity conference in Miami this week. Even more fundamental market shifts that will play out over the next several years also demand attention now, warned Hugh MacArthur, chair of Bain & Company’s global private equity practice, who last week shared insights (and charts) from the firm’s “2025 Private Equity Outlook“. Among the forces at play: the rise of wealthy individuals and sovereign wealth funds, the merging of public and private markets, and increased competition for talent, deals and capital. “The next five or 10 years are going to be a different industry than it was 10 years ago,” MacArthur said. “These changes are going to require having a real strategy in order to adapt.” Available options: Go big. Get acquired by someone who can. Or, differentiate yourself with specialized strategies for generating alpha. 

  • Impact alpha. The private equity industry has tripled in size in the past decade, to $4.7 trillion in assets under management, setting up fierce competition for capital and deals. “It’s a little bit more of a zero-sum game,” MacArthur said. “If I’m a GP that looks a certain way, writes a certain check size, participates in certain industries, I may have to knock somebody else out that looks like me in order to get that allocation from that traditional institutional investor.” That provides an opening for impact investors, who have shown they can deliver differentiated strategies and solid returns to stand out in a sea of funds. Take, for example, workforce-focused direct lending to middle-market companies. “Capital is flowing to the high end of the spectrum, and I think it’s ultimately to our collective shame, because great returns could be made that actually have higher impact on the society at large,” Lafayette Square’s Damien Dwin told ImpactAlpha on the sidelines of SuperReturn (hear Dwin out on ImpactAlpha’s podcast, “Investing in working-class people and places”).
  • Lack of liquidity. And you wonder why limited partners are antsy. Distributions to LPs as a percentage of their net asset value, or the value of their total holdings, was a mere 11% last year, compared to more typical expectations of 20% to 30% over a three- to five-year deal cycle. “Liquidity really is that bad,” said MacArthur. “That puts a real squeeze on LPs’ confidence” in making commitments to new fund opportunities. Emboldened LPs have demanded fee concessions and co-investment opportunities, whittling away the traditional “two and 20” private equity fee structure (for background see, “That (mixed) feeling when your LP co-invests in the sweet deal you’ve just negotiated”). Average net management fees fell by as much as half over the 15 years, according to Bain. Thirty cents of every $1 committed to private equity these days comes without fees attached.
Sources: Preqin; MSCI; Bain analysis
  • New kids on the block. Institutional investors have been the bedrock of private equity for years. But future growth is expected to come from retail investors and sovereign wealth funds in the Middle East and Asia (with $1.7 trillion in assets, Norway’s Government Pension Fund Global is the world’s largest). Sovereign wealth funds will be “the single largest source of dollars coming into the industry over the next decade,” said MacArthur. Similarly, individuals hold 50% of global wealth, yet most retail investors have few, if any, private equity investments. Private equity firms and retail-focused asset managers alike are eying a blending of public and private markets. Tapping these new investors can be expensive. Attracting sovereign wealth funds will require scale; new products, partnerships and staffing are needed to reach individual investors.
  • Keep reading, “Differentiating on impact, tapping retail investors: Charting the changing private equity landscape” by Amy Cortese on ImpactAlpha. 

Dealflow: GP Spotlight

Virta Ventures goes ‘equity-light’ to raise $9 million for early stage climate tech. A depth of operating and angel investing experience helped Virta’s Russell Sprole raise his first fund in a tough market for climate tech. “I saw that these sectors and industries were getting large enough to support enabling technologies, picks-and-shovels businesses,” Sprole told ImpactAlpha. His focus on software-centric approaches for decarbonizing energy, transportation, industrials, agriculture and the built environment comes from his operating experience at SunPower, Stem and Full Harvest. Virta has made nearly two-dozen pre-seed and seed investments of about $250,000 each, and expects to make another seven or eight this year. Virta was an early investor in Tyba, which helps optimize energy storage and recently closed its Series A financing round, and a seed investor in Treehouse, an electrification installation provider that last year closed a Series A round.

  • Policy risk. One prospective LP backed out a day after last November’s US election, citing “too many unknowns,” Sprole said. Overall, he says he was able to raise at least half of his funding post-election. “I’ve largely focused on companies that have less direct or no policy risk,” he said. That includes not only data centers and nuclear and geothermal generation, but climate adaptation solutions, including insurance. “Things that are just needed, given the realities of a changing climate, a changing world,” he said. In addition to individuals and a fund of funds, his LPs include Istanbul-based Borusan Holdings, which has built a collection of manufacturing, power systems, automotive and logistics companies.
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Dealflow overflow. Investment news crossing our desks:

  • Texas-based renewable energy developer Catalyze inked $400 million in debt from Apollo-owned Atlas SP Partners for project financing and development. (Catalyze)
  • Ontario-based Brookfield Renewable is issuing C$450 million (US$315 million) in green bonds to invest in renewable and green projects in North America. (Brookfield Renewable)
  • Japanese gas company Osaka Gas is teaming up with India’s CleanMax to develop solar, wind and battery storage projects for commercial and industrial customers in India. (Economic Times Manufacturing)
  • EQT is acquiring the “small cells” business division of Crown Castle, a communication infrastructure developer. The small cells unit improves wireless communication access by setting up small towers in areas without large towers. (EQT)

Signals: The Liist

GPs betting on biochar in Texas, alt-proteins in Asia and impact tech in Brazil. A new fund manager in Texas has her eye on the growing demand for carbon credit projects that remove carbon from the atmosphere. Biochar, created through a process called pyrolysis that involves heating biomass and biowaste, is an emerging solution for trapping carbon. The biochar not only sequesters carbon, it can restore soil health and enable soil to store greater amounts of carbon. Founder Heather Stiles and her firm Kemet make debt and equity investments in companies supporting biochar production and use, waste-to-energy projects, and carbon trading (for background, see” Corporate buyers nudge voluntary carbon markets toward higher-quality projects”). “The nascent biochar market lacks dominant players,” the company says. Kemet is among the latest additions to ImpactAlpha’s Liist of impact fund managers with investment strategies for achieving positive social and environmental outcomes. Other additions to The Liist:

  • Tech for good. Vox Capital is looking to deliver healthcare and financial services and improve agriculture for low-income customers and farmers in Brazil by scaling up impactful tech companies (for background see, “Huge opportunities and trickle of capital make Brazil an impact growth market”). Vox’s second Tech for Good Growth fund has raised $5 million toward a target of $40 million and plans to make eight to 10 equity investments. As with all of Vox’s funds, the firm is pegging a portion of its carried interest, or cut of profits, to its achievement of designated impact metrics (see, “Moving from the ‘why’ to the ‘how’ of impact incentives”).
  • Future of food in Asia. China-based investment firm Dao Foods invests in companies developing plant-based and sustainable alternatives to meat for the world’s biggest (aggregate) meat-consuming country. The firm, which has offices in Toronto and Beijing, is looking to raise $75 million for its second venture fund. It has already secured backing from more than half a dozen investors, including Twynam Ventures, Matrix Partners, Rich’s Foods and Unovis Asset Management. Increasing income means Chinese households can afford to buy and consume more meat, “which, if left unaddressed, will lead to growing negative environmental, food safety and health impact,” says Dao Foods’ team. “Supporting talented entrepreneurs who are targeting the 400 million millennials in China with new, exciting and delicious plant-based proteins is a huge business opportunity with massive social impact.”

Agents of Impact: Follow the Talent

ImpactAlpha’s spring Re:Construction tour includes screenings of “Equity & ownership: Napoleon Wallace and the Reconstruction of Black wealth at a free, full-day event at the Ackerman Center for Excellence in Sustainability at the University of North Carolina, Friday, April 4 (RSVP); a free evening networking reception hosted by the Robert Wood Johnson Foundation at the Aspen Institute in Washington, DC, Tuesday, April 8 (RSVP); and a showcase program at the Boston International Film Festival, Saturday, April 12 (tickets).

Tom Steyer’s Galvanize Climate Solutions adds Chris Creed, former chief investment officer of the US Department of Energy’s Loan Program Office, as partner and chair of its credit investment committee… Shell Foundation appoints Juliette Keeley, previously with African Leadership Group, as chief impact officer… Aligned Climate Capital welcomes Greg Greenman, previously with Independent Real Estate Investments, as asset management vice president of Aligned Solar Partners. 

Moody’s is recruiting a senior analyst of sustainable finance credit in Singapore… Potencia Ventures has an opening for an impact investment analyst in Colombia or Mexico… The Colorado Health Foundation is on the hunt for a chief financial and administrative officer in Denver… Impactable Investment Group seeks a UK-based senior investment manager to focus on private debt in emerging markets… Tideline is hiring an executive support and operations coordinator. 

Remake, a nonprofit focused on sustainable and ethical fashion, will host a webinar featuring founder Ayesha Barenblat and Alante Capital’s Karla Mora discussing the role of impact funders in sustainable fashion tomorrow, March 19. No registration needed… Impact Charitable’s Cindy Willard will moderate a virtual discussion on unlocking wealth through home and employee ownership, Wednesday, April 2, with Deborah Frieze and Brian Boland of Unlock Ownership Fund (see, “Wanted: First-time fund managers with strategies to ‘Unlock Ownership’ in underserved communities”).

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Mar. 18, 2025