Global alternative asset management group Tikehau Capital has a dedicated sustainability-themed and impact platform focused on four pillars: decarbonisation, nature and biodiversity, cybersecurity, and resilience.
As part of this strategy, Tikehau Capital has pledged to manage €5 billion ($5.4 billion) in assets under management (AUM) exclusively dedicated to climate and biodiversity by 2025. As of 30 June, AUM for the group's impact platform totalled €3.5 billion, of which €2.4 billion, it says, is dedicated to climate and biodiversity.
Across all its impact funds, an Impact Committee reviews the proposed investment's alignment with a 'theory of change' principle, to assess its potential contribution to the strategy's mission and ensure that it adheres to the principle of avoiding significant harm to other environmental and social objectives. Tikehau Capital also measures both positive and negative impacts, which it presents in progress reports and annual impact reports.
In December, Tikehau Capital launched a private debt strategy dedicated to decarbonisation. The cost of borrowing for portfolio companies is systematically linked to their annual decarbonisation performance using the Science Based Targets initiative (SBTi) methodology.
In 2022, approximately 50% of the companies financed through Tikehau Capital's direct lending and corporate lending strategies also included an ESG ratchet – a trigger that adjusts the interest rate margin up or down depending on whether ESG targets are met.
Furthermore, 100% of the companies that received financing through Tikehau Capital's Impact Lending strategy included an ESG ratchet mechanism in 2022. This vehicle seeks to invest in European small and medium-sized enterprises (SMEs) that play a role in advancing the sustainable economic transition in Europe.
Cécile Cabanis, deputy CEO of Tikehau Capital, commented: "As a global impact-led asset manager, Tikehau Capital is committed to directing global savings towards innovative and adapted financing solutions that create sustainable value for all stakeholders and accelerate positive change for society.
"This award is testament to our robust sustainability-themed impact platform and systemic approach, which is underpinned by our belief that the private sector plays a vital role in allocating funds with the genuine capacity to form the bedrock of a more sustainable economy that respects planetary boundaries," Cabanis added.
Additionally, Tikehau Capital also won the Impact project/investment of the year – Agriculture and sustainable land use award for its private equity regenerative agriculture strategy, launched in 2022 in partnership with AXA, the global insurance and asset management company and Unilever, the global consumer goods company.
With a target size of €1 billion, this private equity impact strategy seeks to invest in projects and companies supporting the scaling-up of the regenerative agriculture transition and restoring soil health.
An impact framework has been designed and will apply to each investment around three indicators: carbon reduction, water management, and biodiversity restoration. For each investment, at least one of the three indicators must lead to positive impact and the two others must be neutral.
Tikehau Capital will also measure health and social conditions improvement for farmers. In addition, for every investment, targets will be defined in collaboration with the management team. Part of the strategy's performance fee will be based on reaching these targets.
One IMPACT Awards judge said the agriculture initiative was an "excellent example of collaboration to support sustainable land use and food systems".
In September, just over 12 months after the launch of this initiative, the strategy successfully executed its inaugural investment in Biobest, a Brazilian pollination and biological pest and disease control firm.
It is expected that the €120 million investment will expand Biobest's range of biological solutions to encompass biocontrol and pollination services.
Hélène Henry-Prince and Laurent-David Charbit, co-heads of Tikehau Capital's Private Equity Regenerative Agriculture Strategy, commented: "Agriculture stands at the crossroads of the planet's health and the wellbeing of its people. This award reaffirms our commitment to fostering a more resilient agri-food sector, with the primary goal of supporting companies and projects committed to enabling the transition to regenerative agriculture at scale."
