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Lightrock raises €860m to target net zero innovators

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Private equity firm Lightrock has raised €860 million for its inaugural impact investment fund, backed by Liechtenstein’s LGT group.

  • London-based global private equity firm Lightrock has raised €860 million to launch the Lightrock Climate Impact Fund (LCIF).
  • Classified as an Article 9 fund, LCIF will invest in European and North American growth and early-stage companies driving net zero.
  • Private client appetite for  Lightrock’s impact investment portfolio may signal more interest from private equity in ESG and impact. 

Commitments to fund Lightrock’s LCIF exceeded its target by 43%. Funding came from a diverse range of investors, including Liechtenstein’s LGT Group and its private banking clients. It plans to invest in growth companies with innovative and technology based solutions focused on energy transition and net zero.

LCIF targets growth-stage net zero technology and innovation companies 

The LCIF will target innovations that accelerate the transition to net zero. It plans to allocate between €10 and €40 million per investment in European and North American growth-stage companies, and may also make some investments into startups at a smaller scale. 

Whether at start up or growth-stage, Lightrock says it will only invest in companies that show clear potential to be leaders within the climate themes they target. They also have to demonstrate a path to profitability. 

Four of these themes have been identified as important to achieving net zero by 2050. These include energy transition, decarbonising industries, sustainable food and agriculture, as well as green mobility. 

A further area of focus will be the underlying technologies and solutions that support decarbonisation across sectors and industries. Seven investments that fit LCIF’s criteria have already been made for it by Lightrock.

Impact investing head start from Lightrock’s fundraising and industry affiliations 

Lightrock has already made seven investments that will fit into LCIF’s portfolio. These came after a spate of fundraising since 2021, including a $300 million Latin America focused growth fund in May 2022, and the $900 million Lightrock Growth Fund I which closed in June 2021. The firm currently has a total of $3 billion in assets under management.

As an asset manager Lightrock is also a member of the GIIN, and  an inaugural signatory of the IFC’s Operating Principles for Impact Management. In 2021, the firm engaged Bluemark, an independent impact verification firm, to verify the alignment of its investments with these principles. 

It has also developed its own proprietary impact scorecard. Using industry best practice, it has made a risk-adjusted determination of its investments. The Lightrock Net Impact Score assesses a company’s impact potential, or ability to create positive impact, and the related impact risks. 

Lightrock says it has been focused on impact investing since 2009, with investments in over 85 companies, across 14 countries and 7 sectors. It also claims to benefit from over a century’s worth of investing experience from its affiliation with LGT, formerly known as Liechtenstein Global Trust, which is owned by the royal family of the principality.

LGT private clients and new investors help LCIF exceed target 

The original LCIF funding target of 600 million was overshot by 43%, with a list of interested investors including some of the LGT Group’s private banking clients. LGT Group is the largest family-owned private banking and asset management group in the world, and is owned by the royal family of Liechtenstein.

Several first time investors in the LCIF also included charitable foundations and experienced impact investors. Prominent among these were the First Swedish National Pension Fund, charitable foundations like the Bay Trust and Grantham Foundations, as well as Dutch impact investors Carbon Equity and Wire Group. 

Lightrock was founded in 2009 by its chairman Prince Max Von Liechtenstein, who is also the chairman of LGT Group. This gives it access to nearly a century of investment experience. Interestingly, LGT’s own policy on limiting its investments in coal and fossil fuels establishes a shift towards ESG and impact investing.

Lightrock’s success in impact investment will be based on outcomes and returns in the LCIF. To that end, it seems to have created adequate internal checks, and external partnerships, to ensure its performance is assessed to fair industry standards.

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