Lack of liquidity and exits is holding back new capital commitments to impact fund managers. Last year was one of the worst for impact fundraising, especially for equity funds.
Switzerland-based Blue Earth Capital for the past five years has been working to seed a market for impact secondaries. The firm has raised just over $100 million toward a $300 million target for its first dedicated secondaries vehicle.
“To continue to prove that we can generate impact and financial returns, we need liquidity to accelerate. Secondaries are a tool to do that,” Blue Earth’s Nicolas Muller told ImpactAlpha.
Blue Earth has backing from French development finance institution Proparco, the Ursimone Wietlisbach Foundation, and German family office Stella.
The firm will commit 30% of the capital to emerging market opportunities. Proparco provided catalytic first-loss capital for emerging market deals to buffer other investors’ risk perceptions.
LP / GP
Blue Earth acquires both GPs’ stakes in companies, and LPs’ stakes in impact funds. It began doing secondary deals in 2021 through its multi-asset impact fund, which included the acquisition of three impact fund investments and a stake in Nigerian fintech company Moniepoint from British International Investment. It launched the dedicated secondaries strategy at the end of 2024 and has since closed two deals: a stake in Spanish organic waste treatment company Gestcompost, which it acquired from Suma Capital; and a portfolio of four emerging market impact funds, which were sold by an undisclosed investor.
Sustaining impact
Secondary funds are an established strategy in traditional private equity, but they’re new to impact investing. A recent impact market report tallied just four dedicated impact secondaries funds. One is US-based North Sky, which raised $250 million in December for its fifth secondaries fund.
“Impact is a nascent asset class. There is pressure on fund managers to generate liquidity early on,” said Muller.
Dedicated impact secondaries funds are important for sustaining and deepening the impact seeded by early investors, he added. “One of the impact factors we look at is what a seller is going to do with the proceeds. Is the seller recycling the proceeds into additional impact investments?”
