As the markets have turned for more negotiation power with LPs, expectations are going green, according to PitchBook: LPs are demanding terms aligning managers of impacts funds more closely with their sustainability outcomes.
PitchBook data on impact funds further show that:
- Asset managers expect to grow their ESG-related AUM to USD 33.9 trillion by 2026, almost a doubling from 2021 with USD 18.4 trillion.
- In 2022, impact funds received almost USD 22 billion across 21 funds globally, with 2023 receiving USD 6.4 billion as of July 10.
This means, amongst others, that LPs have increased focus on GPs linking their carried interest to more than monetary achievements, such as reducing carbon emissions or improving gender or racial representation on the boards of the fund’s portfolio companies – called dual carry.
At Mazanti-Andersen, we have advised on numerous funds with dual carry in different models.
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