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ImpactAlpha LP/GP: Silver linings and hidden opportunities at the Milken Global Conference

ImpactAlpha · May 6, 2025

Greetings, Agents of Impact!

Welcome to this week’s ImpactAlpha LP/GP, where we take you inside the real business of impact investing and the dynamic relationships between owners, managers and intermediaries of impact capital.

📞 Get PluggedIn, today. Shared equity strategies can help low-wealth business owners buy the commercial properties where they operate. The appreciating asset value can then be leveraged for growth capital or to build generational wealth. Partners in Equity’s Talib Graves-Manns and Wilson Lester join ImpactAlpha’s Sherrell Dorsey to discuss how they are channeling capital to foster Black entrepreneurship and build equity for empowerment and resilience. Today at 10am PT / 1pm ET / 6pm London. RSVP now.

In this week’s newsletter:

Taking the temperature at the Milken Global Conference
Ara’s $800 million for industrial decarbonization
Neuberger Berman’s $300 million impact fund
What kind of impact fund manager are you?

Featured: Overheard at the Milken Global Conference

With markets down, up and sideways, investors look to ownership, AI and the rest of the world. Titans of finance convened for a collective pep talk at the Milken Global Conference, telling each other that maybe the current economic damage won’t be that bad and, in the meantime, there are deals to be done. “Stay calm and carry on,” KKR founder George Roberts told some of the 5,000 attendees at the star-studded gathering in Beverly Hills, Calif. Under the theme, “Toward a Flourishing Future,” speakers scratched for silver linings, hidden opportunities and even higher purpose. “I think we do have the responsibility to transition certain aspects of our business to a broader set of the communities that we care about,” said Vista Equity Partners’ Robert Smith, who famously paid off $34 million in student loan debt for 2019 graduates of Morehouse College. While uncertainty over the Trump administration’s chaotic rollout of global tariffs has frozen large capital expenditures, smaller firms have an opportunity to move ahead, said Gautam Bhandari of Miami-based I Squared Capital, an infrastructure investor. “Yes, inflation is upon us, and maybe a slowdown will come, but that generally bears well for infrastructure because it’s a defensive asset,” Bhandari said. Treasury Secretary Scott Bessent urged the audience to look past the turbulence and lean into a future of abundance. “US markets are antifragile,” Bessent said. “The entirety of our economic history can be distilled in just five words: ‘Up and to the right’.”

Rise of the rest. As many other investors wait and see, sovereign wealth funds and other investors from the Middle East are commanding rapt attention. The convergence of financing, energy and AI means the region is “taking over from Europe as one of the dominant parts of the world order,” said Citi’s Jane Fraser. Likewise, India is a beneficiary of the diversification away from China. “But that’s the icing for the cake. The cake is India itself and the domestic economy.” The US accounts for only about 11% of world trade. “The rest of the world isn’t standing still,” Fraser said. “It’s moving forward and changing some of the partnerships.”
Productivity gains – and job losses. AI came up on nearly every Milken panel. Vista Equity’s Smith noted that a billion knowledge workers worldwide account for about $40 trillion in salary, spending and impact. “All of those jobs are at risk at some degree, at some level, through artificial intelligence,” he said. Private equity firms deliver returns to investors by boosting performance and productivity, “but at some point, the productivity of what we do will impact some broader economic employment dynamics,” Smith said. “Part of our responsibility is to distribute knowledge, distribute capabilities.” Boston Consulting Group’s Rich Lesser expects to see “an enormous amount of individual asset displacement with AI,” as is already apparent in leading companies. “We will also see it opening up new ideas we haven’t had before, just like every generation of the technology revolution.”

Share the wealth. When Michael Milken tossed out a question about employee ownership, Jonathan Sokoloff of the $70 billion private equity firm Leonard Green & Partners knew what to emphasize. “It makes us more money. It makes our investors more money,” Sokoloff said. And, he added, thousands of employees experienced “a life-changing event of financial independence.” When Home Depot last year paid $18 billion in cash for SRS Distribution, a roofing materials distributor owned by Leonard Green since 2017, at least 9,000 employees shared in more than $3 billion in proceeds. The firm sees smaller payouts to employees several times each year, he said. “Many of them are immigrants. They may be military veterans. They may be ex-incarcerated. And these are kind of blue-collar jobs where we give them a chance and make them stakeholders.” Some of Leonard Green’s healthcare investments came in for criticism from a Senate panel earlier this year for putting “profits over people.” But Sokoloff finished with a flourish: “The American Dream is alive and well in private equity.”

Strengthening private markets. A lack of coordinated policy is deterring private investment from flowing to national priorities such as domestic manufacturing, technology and infrastructure. The Milken Institute Inclusive Capitalism program convened a research team to examine ways to unlock capital while democratizing access for everyday investors. Among them: Lowering barriers for emerging managers by scaling catalytic capital programs such as the State Small Business Credit Initiative, created to support small businesses after Covid. Other recommendations: Expand investor access to private markets, including through crowdfunding, and expanding liquidity by scaling secondary markets for private asset trading. Says Milken Institute advisor Calvin Cooper, “Let’s build a private market ecosystem that funds the new industrial economy in a way that works for all Americans.”
Keep reading, “With markets down, up and sideways, investors look to ownership, AI and the rest of the world,” by Amy Cortese and David Bank on ImpactAlpha.

Dealflow: Green Infrastructure

Ara Partners scoops up $800 million as it expands from PE to infrastructure. With a focus on industrial decarbonization, the Houston-based investment firm has raised $800 million for its first infrastructure fund. The fund, which had targeted $500 million, will take majority stakes in mid-sized industrial assets in North America and Europe. Institutional investors, sovereign wealth funds and endowments were attracted to Ara because of its private equity strategy, which is now on its third fund. “Private equity plays a role in scaling, commercializing, and proving that the technology works,” Ara Partners’ Teresa O’Flynn told ImpactAlpha. “But when it’s proven and you need to do mass build out, the right type of capital to do that is infrastructure. As a firm, we felt we had a front row seat on the emerging infrastructure opportunity.”

Greenfields. Industry accounts for about 60% of global emissions, but has attracted less than 10% of climate-focused capital, said O’Flynn, who joined Ara from BlackRock in 2022. She leads Ara’s infrastructure strategy alongside George Yong, who joined from infrastructure investor ArcLight Capital. The bulk of climate-focused infrastructure funding is for renewable energy. Ara will look to less crowded sectors, such as infrastructure for biofuels, recycling, green chemicals, energy efficiency and food and agriculture. “It’s a huge opportunity but has been significantly overlooked,” said O’Flynn.
Geographic diversification. The fund will invest in new projects and also transition existing infrastructure to align with current and long-term trends. In Europe, for example, a push to reduce reliance on imported natural gas is creating demand for bio-based fuels. In the US, fuel distribution networks need to be retooled for low-carbon alternatives. Ara Infrastructure Fund I has made three investments to date. USD Clean Fuels is a Houston-based developer of renewable fuel feedstocks and logistics infrastructure on the West Coast. Lincoln is a Greenville, SC-based logistics operator for conventional fuels and biofuels. Natural World Products in Ireland recycles organic waste.
Keep reading.

Neuberger Berman raises $300 million for second private equity impact fund. The 86-year-old, employee-owned investment manager in New York launched its impact-focused private equity fund strategy in 2021, raising $280 million to invest in funds and companies delivering essential products and services. With its slightly larger second fund, the firm is continuing that strategy, noting that such businesses perform well during market turmoil. The second fund was backed by unnamed public and private pension funds, insurance companies, foundations, family offices and individuals. It has invested in three funds and eight companies, including a water pumping company for agricultural irrigation and industrial use, an education technology company, and a healthcare company improving patient triage. Neuberger Berman says its impact and sustainable investment portfolio has reached $1.3 billion in assets.

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Dealflow overflow. Investment news crossing our desks:

Lowercarbon Capital led a $25 million equity round for El Segundo, Calif.-based Rainmaker Technology, which uses drones for cloud seeding to increase rainfall in drought-prone areas. (Axios)
Canada’s Frog Lake First Nation anchored a planned $100 million climate AI and software fund from Raiven Capital, a venture capital firm based in Silicon Valley, Toronto and Dubai (and not to be confused with Raven Indigenous Capital Partners, also in Canada). (Raiven Capital)
TLG Capital secured $75 million for its second Africa Growth Impact Fund, a private credit fund. The International Finance Corp. anchored the fund; other investors include France’s public investment bank Bpifrance, Swedfund, Norfund, and the UK’s Foreign, Commonwealth and Development Office. (Africa Private Equity News)

Impact Voices: Impact Management

Illusionist, Learner, Achiever or Champion: What kind of impact fund manager are you? Fund managers with strong storytelling skills but weak foundations for delivering positive impact may be “Impact Illusionists,” exposing themselves and their limited partners to charges of impact washing. Conversely, other fund managers may have very robust impact practices but limited ability to articulate or share the impactful work they’re doing. These are “Silent Achievers.” Amsterdam-based Phenix Capital has seen all types of fund managers by diligencing hundreds of GPs on behalf of institutional investors. Phenix’s team has sorted through data presentations and storytelling methods to identify “Four Faces of Impact,” a matrix to classify how managers report and communicate their impact. “By recognizing these archetypes, investors can prioritize greater transparency and accountability in their impact due diligence, ultimately encouraging managers to strive to become ‘Impact Champions’,” write Phenix’s Daniel Moreno and Mohit Saini.

Champions and Learners. “Impact Champions” represent the ideal archetype. They’re “fund managers with high impact potential, robust impact practices, transparent and comprehensive reporting, and a compelling impact narrative,” Moreno and Saini explain. “Include these managers in your portfolio to maximize contribution to positive social or environmental impacts.” “Impact Learners,” are early-stage fund managers with possibly lower impact potential and underdeveloped impact investment processes. “Help these managers in adopting best practices, strengthening their impact foundations, and crafting a compelling impact narrative,” the authors recommend.
Room to grow. The matrix highlights ways investors can engage managers for improvement. Even Illusionists can strengthen their impact foundation and investment selection process. Learners can identify best practices and craft their impact narratives. Silent Achievers can improve their storytelling. Write Moreno and Saini, “We believe this will contribute to a future where more fund managers evolve into ‘Impact Champions,’ making this a norm rather than an exception.” In an accompanying post, Impact Frontiers’ Matt Ripley counsels fund managers to be transparent in their selection of case studies to offer “a credible and compelling narrative of change that complements other performance disclosures.”
Keep reading, “Illusionist, Learner, Achiever or Champion: What kind of impact fund manager are you?,” by Phenix Capital’s Daniel Moreno and Mohit Saini on ImpactAlpha.

Agents of Impact: Follow the Talent

OpenAI, founded as a nonprofit, will remain under nonprofit control despite efforts to convert to a for-profit, the company said on Monday. OpenAI’s for-profit LLC, which has been under the nonprofit since 2019, will transition to a public benefit corporation. “We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware,” said OpenAi’s Sam Altman. “We believe this sets us up to continue to make rapid, safe progress and to put great AI in the hands of everyone.” The nonprofit will continue to control the public benefit corporation as a shareholder.

AlphaMundi Foundation appoints Jose Luis Ruiz de Munain, AlphaMundi Group’s managing director of Europe, as a senior advisor… Inter IKEA Group taps Lena Julle as chief sustainability officer… Hannah Shoesmith, previously with Schroders, joins State Street Global Advisors as managing director and head of sustainability stewardship… The African Venture Philanthropy Alliance welcomes Precious Wilson Nkandu, formerly with Africa Infrastructure Development Association, as chief operating officer… Meredith Marshall, previously with Uncharted, becomes executive director of the Colorado Office of Economic Development and International Trade.

UNDP is looking for an engagement analyst… Lloyds Banking Group seeks a senior climate manager… US Bancorp Impact Finance has an opening for impact measurement and management manager… Cypress Creek Renewables is recruiting an investment analytics senior associate… Packard Foundation is hiring a program officer for global fisheries… Greenbacker Development Opportunities Fund seeks an associate.