Dealflow | July 16, 2019

Wire Group’s new impact fund-of-funds offers global footprint for Dutch family offices

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, July 16 – European investors have been leaders in sustainable investing. Institutional investors in particular have been racing to shift public equity portfolios to holdings screened for environmental, social and governance metrics. That same progression hasn’t played out in private impact investing. 

Wire Group, based in the Netherlands, is working to change that, with a vision to “professionalize” impact investing for Dutch family offices. After 10 years of impact investment advisory work, the firm is launching an impact fund-of-funds targeting sustainable food and agriculture, access to clean energy and healthcare, and conservation around the globe.

“The fund builds upon our existing experience and expertise in impact investing of the past years,” Wire Group’s Carolien Wegener told ImpactAlpha.

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Wire Group is looking to raise €60 million ($67.5 million) to invest in other impact funds. So far the firm has secured soft commitments and is hoping to reach a €30 million first close by the end of this year. It has also pledged to peg 50% of its own carry to the fund’s impact performance. The intent is to give clients an option for implementing the type of guidance and due diligence Wire Group offers. 

Wire Group launched in 2010 with a mission to professionalize impact investing in the Netherlands. The group started by hosting workshops for family offices, and has supported them on their “conscious wealth” journey ever since, explained Wegener. Often this begins with identifying the individual values family offices, then helping them understand how their portfolios are actually invested. The outcomes vary: some families identify a portion of their portfolios to move into values-aligned investments, while others gradually pursue a 100% impact strategy.

“We talk about transforming the system rather than getting every investor to 100% impact portfolios as quick as possible,” Wegener said.  “Every investor has its own starting point and impact journey. What matters is raising consciousness on the way our money works in the world.”

The firm quickly realized that merely raising investors’ awareness of how they could align their wealth with their values was inadequate—investors needed help doing it. Wire Group waded into facilitating direct deals, then progressed to orchestrating capital between its clients and impact fund managers. They helped set up a small feeder fund for TPG Growth’s first Rise Fund. As of last year, it had directed €20 million into impact investments from 30 investors.

Dry Powder

A third of family offices, which hold trillions in assets worldwide, say they’re engaged in some form of impact investing, according to UBS. Still, a perceived lack of investment opportunities is keep more family capital on the sidelines, showed a Family Office Exchange survey showed last month.

“There is an incredible amount of dry powder out there right now,” Paulina Cromwell from the Family Office Exchange, a network of 350 wealthy families, previously told ImpactAlpha. “[Family offices] don’t need to deploy capital. They can wait for high-quality and innovative investment opportunities before engaging.”

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That’s why for Wire Group, raising an impact fund was its next logical step.

Wire Group opted for a fund of funds strategy to match the diversity of interests and values of its current and future clients, Wegener explained. With its target size, the firm is looking to invest in 10 to 15 funds covering a global footprint over the next three years.

Financially, it is targeting high single digit returns. As for impact, it is aiming for a 2X impact multiple, meaning that every euro invested generates two euros-worth of social or environmental value. Other funds have taken a similar approach to quantifying and accounting for impact—namely the Rise Fund, which spun off its impact measurement group earlier this year.