Stockholm (NordSIP) – According to the latest annual impact fund universe report from Phenix Capital, an impact investment consulting firm, there was a considerable decrease in the number of impact funds launched in 2020. This is the first time since Phenix Capital started collecting data in 2015 that the number of funds launched has decreased.
The report is compiled on the basis of the Phenix Impact Database which currently tracks the allocation of €331 billion to more than 1,600 institutional impact funds. Of this total, €10 billion was committed to funds launched in 2020, down from €34 billion in 2019. The report suggests that the COVID-19 pandemic is largely to blame for the decrease in new funds in 2020.
Among other trends, impact investing was dominated by developed market investments, social infrastructure investment grew in prominence, and public companies outperformed their benchmarks in 2020.
Social Infrastructure replaced Health Services in 2020 as the sector with the third greatest capital commitments. Meanwhile, an even larger proportion of commitments have been made to Renewable Energy and Climate than in previous years.
“2020 has been a transformative year on many levels, for the world as well as for the impact investing industry,” says Dirk Meuleman, CEO of Phenix Capital Group. At the time when it mattered the most, we saw the impact investment community immediately jump into action, catalyse capital towards solutions, and showcase its resilience in a downturn. Impact investing continues to deliver on its promise of yielding attractive and new opportunities for asset owners, managers, and service providers while tackling some of humanity’s greatest challenges,” Meuleman adds.
Within developed markets, Western European (42%) investments dominated their North American (24%) counterpart. One of the immediate impacts of COVID-19 being capital flight from emerging markets. Moreover, Phenix Capital also notes that SDG 13 – Climate Action, SDG 7 – Affordable and Clean Energy, and SDG 9 – Industry, Innovation and Infrastructure are the most targeted SDGs, raising the most capital to date.
Private markets continue to raise a majority of capital, with private equity remaining the largest asset class, representing 47% in 2020. Private debt and Infrastructure being the second and third largest asset classes.