Impact and returns can go hand in hand

Private equity focuses on investments in companies not listed on the stock exchange. The investments are made by private equity funds, which raise money from various investors. Acquisitions of this type are all about creating value. In private equity, a controlling interest is acquired. An investment in private equity can offer higher returns than an investment in listed shares, but also brings risks with it, such as that of losing all or part of the capital. Another feature of private equity is its long-term vision, whereas listed shares are characterised by a quarterly focus. From the moment of acquisition, the private equity fund has the sale of the company with synergy effects in mind.  The capital structure in private equity allows the fund to provide an additional cash injection in the short term if a company gets into trouble.

Previously, private equity has been purely concerned with strengthening a company strategically and operationally and then selling it for a profit or floating it on the stock market. However, some players from the private equity sector are focusing on investing in sustainable products and services in order to achieve financial returns with a positive impact. For an increasing number of fund managers, a positive impact is at least as important as financial returns.

For fund manager Jan Stahlberg, achieving an impact is the guiding principle in his work. In an interview he takes us through his vision of a better world.

For sustainable investors, this is good news for several reasons. Just as with investments in listed sustainable shares, funds and bonds, it helps them to achieve a positive and measurable impact on people, the environment and society with their investments. This is given an extra boost with private equity. New capital usually becomes available in the context of private equity investments, which the company can use to intensify its impact-generating activities. Such a financial injection therefore ensures sustainable progress. It’s an investment that can make a positive contribution to a better world and that offers the prospect of a sound financial return at the same time.

At ABN AMRO it is possible to invest in private equity funds with an amount of 100,000 euros or more per investor. Such an investment requires freely disposable assets of 5 million euros or more*. An investment in private equity can help ensure a balanced investment portfolio with sufficient diversification and a healthy risk-return ratio. The focus is on the long term, as the investments cannot be traded in the meantime. Investing in private equity is suitable for experienced investors with considerable assets, a long investment horizon and a high risk profile. Before you invest in private equity, ABN AMRO MeesPierson will assess its suitability for you.

^{* For a client already investing in a diversified private equity product (PE Selection fund or secondaries), a limit of 3 million euros applies.}

Investors in private equity impact funds receive interim reports to inform them about the positive and measurable impact on people, the environment and society that the companies in the fund achieve with their product or service – technology to save energy in buildings, for example, or educational technology that helps disadvantaged children. This way, investors know exactly what positive difference they are making with their investment.

Investing involves risks

Investing is done with money you have spare, in addition to your buffer for unforeseen expenses. It can be lucrative, but there are risks involved, and you could lose all or part of your investment. It is good to be aware of this.

Want to talk about Private Equity?

Would you like to know how you can achieve returns with an investment in private equity? Contact your private banker.