Greetings, Agents of Impact! We have a lot to be grateful for, so we’re taking a Brief break for the Thanksgiving holiday in the US. We’ll be back in your inbox on Monday, Dec. 1. Let your friends and colleagues know about our holiday sale.
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.
📞 Get PluggedIn: Latin America is the climate market US investors can’t afford to ignore. From bio-based materials to urban mining and distributed energy, Latin America is a proving ground for bold climate innovation. For the next PluggedIn, Savia Ventures’ Andres Baehr joins Sherrell Dorsey to detail Savia’s investment thesis, as well as practical steps for US and European investors trying to maintain momentum in the face of climate headwinds. Get PluggedIn, Tuesday, Dec. 2, at 10am PT / 1pm ET. RSVP now.
☎️ Agents of Impact Call: Tackling advisor roadblocks. Your clients want to do more with their money. You want to do more with your clients. Financial advisors who engage clients about values and offer credible impact strategies can deepen their relationships, prepare for generational shifts and prosper through the Great Wealth Transfer. Advisors can bring their real questions and concerns to this candid conversation with CapShift’s Liz Sessler, ImpactPHL’s Cory Donovan, Westfuller’s Randall Strickland and Glenmede’s Mark Hays, along with ImpactAlpha’s David Bank, Thursday Dec. 11, at 10am PT / 1pm ET / 6pm London. RSVP today.
In this week’s newsletter:
- Differentiation in the jittery private credit market
- LP Scan: A dozen LPs committing to private credit
- Pension and insurance backing for natural climate solutions
- Focus on Africa for Japan’s development finance institution
Featured: Private Debt
In jittery private credit market, LPs look for differentiation, co-investment and sustainability. As private credit has ballooned and its economic underpinnings have become shakier, LPs are scrutinizing managers. In: differentiated strategies and conservative underwriting. Out: low-margin loans in crowded sectors that encourage looser underwriting. “Everything tastes like chicken,” joked Nayef Perry of Hamilton Lane at the SuperReturn Private Credit conference in New York last week. “Everyone is looking for differentiation.” Some borrowers that loaded up on cheap debt are now struggling with higher interest rates and an uncertain economy (see, “Debt bubble? Private credit jitters put even impact investors on edge”). Chris Creed, a partner with Galvanize’s credit and capital solutions strategy, suggested that sustainable private lending may be removed from the issues afflicting the broader “race to the bottom” in the syndicated loan market. “Reading the headlines, it’s either the golden age of private credit, or, ‘Oh my God, we’re about to enter the next financial crisis,’” he said. “And I don’t think that that has anything to do with the kind of private credit that [we] are talking about.”
- Cash flowing. Investors see opportunity for growth in sustainable infrastructure and the energy transition. Some $650 billion in equity has been raised or deployed for climate related investments, compared to just $50 billion is for climate-focused private credit. “We believe there’s a massive market opportunity set,” said Joshua Kim of the California State Teachers’ Retirement System. Kim leads private credit for the pension fund’s $1.3 billion Sustainable Investment and Stewardship Strategies that launched in 2021. “Because we’re a young portfolio, we’re very much in the J-curve and in need of both [net asset value] and yield to offset some of our equity strategies,” he said. “We are doing more sustainable and climate late-stage buyouts that are mature businesses and cash flowing.”
- Co-investments. LPs have embraced co-investment strategies for private credit and equity to lighten their fees and goose returns. Also: “It’s a great tool for us to get to know a manager who might not yet be raising a fund, or might be raising a first fund that is not quite a fit with our client demand for the moment,” said Guilla Roverato at Wilshire, which advises on more than $1.5 trillion in institutional assets. For South Korean sovereign wealth fund KIC, “we’re trying to generate the alpha with the co-investment, and by making a commitment to their existing funds, we can evaluate how they do,” said KIC’s Suyang Kim.
- Mark-to-myth. After decades of low interest rates and stability, the economic environment has grown volatile. Private lenders’ valuations may not reflect the true state of their borrowers – what some researchers have dubbed “mark-to-myth.” Jay Clayton, who heads the Department of Justice’s Southern District of New York, warned this week that private lenders will come under more scrutiny. The public will “want to know that private marks, where there’s liquidity offered or an asset value-based fee to be paid, are good marks,” he told Bloomberg. The heightened scrutiny “sets up the framework for conservative lending strategies,” said Invesco’s Scott Baskind. “Manager differentiation,” he added, is where we’ll “start to see a lot more separation.”
- Keep reading, “In jittery private credit market, LPs look for differentiation, co-investment and sustainability,” by Amy Cortese.
LP Scan: Private Credit
More than a dozen limited partners backing impact private credit strategies. As concerns mount about the broader private credit market, impact-focused debt funds continue to attract commitments from institutional investors, corporations and development banks. New York-based Breakwall Capital, for example, recently raised $125 million for its first energy credit fund, anchored by the New Mexico Educational Retirement Board. ImpactAlpha has tracked LP commitments to private credit, spanning climate infrastructure, emerging markets and community development.
- European institutions. Allianz Global Investors raised €705 million ($760 million) for its impact private credit strategy lending to European companies focused on climate change and inclusive economies. Anchor investors included APG Asset Management, the European Investment Fund and La France Mutualiste. Dutch pension fund Pensioenfonds KPN allocated €300 million ($325 million) to M&G Investments to make impact private-debt investments, a mandate executed by Aegon Asset Management.
- More.
Dealflow: Climate Finance
Just Climate raises $375 million from pension and insurance funds for natural climate solutions. Generation Investment Management launched Just Climate in 2021 to channel institutional financing into decarbonization projects and startups. Just Climate has raised $375 million for its Natural Climate Solutions strategy, which cuts checks of $30 million to $50 million for innovations that cut emissions in food systems, waste management and sustainable supply chains (see, “Just Climate leans into ‘natural’ strategies”). New investors include Netherlands-based Achmea Investment Management, the UK’s Environment Agency Pension Fund and the Royal Bank of Canada. The strategy had secured $175 million in anchor financing in March from the California State Teachers’ Retirement System and Microsoft’s Climate Innovation Fund.
German family offices co-invest with EQT impact fund in mobile filtration provider. Swedish investor EQT acquired a majority stake in Belgium-based Desotec to expand the use of a mobile filtration system to remove PFAS “forever chemicals,” along with hydrogen sulfide and other pollutants, from air, water and soil. German family offices Athos and Merckle co-invested alongside EQT, which made the acquisition through its €3 billion EQT Future Fund. Desotec’s “filtration as a service” model cuts waste by recycling carbon filters and destroying captured pollutants for its industrial customers. “Desotec combines an attractive business model with measurable environmental impact,” said EQT’s Andreas Aschenbrenner. EQT acquired Desotec from private equity funds managed by Blackstone, which will remain a minority investor in the business.
Dealflow overflow. Investment news crossing our desks:
- South Africa’s Public Investment Corp. invested $30 million in Enko Capital’s private credit fund for mid-sized African companies. The credit fund secured $100 million in October from SICOM Global Fund, development financiers, family offices and African pension funds. (Enko Capital)
- FirstRand Group, also in South Africa, and British International Investment launched a $150 million financing facility to provide transition finance for projects decarbonizing high-emission sectors in Africa. (BII)
- Kenya-based Chui Ventures closed its first fund at $17.3 million, surpassing its $10 million target with backing from the Mastercard Foundation, the Dell Foundation and a group of mostly-African family offices and individual investors. (Chui Ventures)
Signals: Pathways to Growth
Japan’s development agency steps up for Africa’s (larger) private capital providers. With the US retreat from international development and climate action, Japan has become one of the leading providers of blended capital for both. Its development finance institution, the Japan International Cooperation Agency, or JICA, is ramping up its investments in private capital funds that funnel money to local small businesses and green opportunities. The latest example: a $50 million commitment to Helios Investment Partners’ fifth private equity fund for growing companies supporting Africa’s digital transformation. JICA’s investment is part of the development bank’s Impact Investing for Development of Emerging Africa, or IDEA, strategy, which promises to deploy $750 million and mobilize an equal amount from other investors over the next three years. It builds on years of technical assistance and advisory work to support Africa’s investment ecosystem, JICA’s Ryo Tsujii tells ImpactAlpha. “We’re doing this as a natural course as our work evolves in the development space. We need to pivot to private sector engagement in Africa, and businesses are natural enablers of economic growth.”
- Emerging markets. JICA’s private sector financing outside of Asia represents a small share of the agency’s portfolio. Just 2.6% of its private finance and lending activity last year went to Africa, compared to 68% in Asia. But that’s more than the year before. Tsujii says JICA’s deal activity aligns with Japanese investors and corporations’ expanding interests in emerging markets, which offer new customer and production channels. Its IDEA initiative focuses on fund investments in Africa’s core economic and social opportunities and is targeting fund managers “that are capable of deploying and implementing exits,” Tsujii says. “Our focus will be on the capacity or track record of fund managers.” That may exclude the many first-time or smaller fund managers, raising funds of anywhere from $5 million to $50 million. “We’ve seen that the market has been struggling to raise funds, deploy capital and make sufficient returns to meet the requirements of investors,” Tsujii acknowledges. “We need to play a countercyclical role to grow more confidence in the markets.”
- Keep reading, “Japan’s development agency steps up for Africa’s (larger) private capital providers,” by Lucy Ngige.
Agents of Impact: Follow the Talent
Lauren Crain, formerly with World Education Services, joins Social Strategy Associates as a senior advisor… Natalie Rodriguez, previously with Salesforce, joins Energy Impact Partners as a strategic partnerships associate… East Bay Community Foundation is hiring a program director… Novo Nordisk is looking for a vice president of sustainability.
The Institute for Social Value is on the hunt for a CEO in London… Also in London, Better Society Capital seeks an investment portfolio director… Paul Ramsay Foundation is recruiting a partnership officer in Sydney… Border to Coast Pensions Partnership is recruiting an independent non-executive director and member of its new board investment oversight committee.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Nov. 26, 2025
