Earlier this week the Financial Times reported that Jim Roth, co-founder of LeapFrog Investments, has set up Europe’s first group that will focus on investing directly in other impact investment firms, which allocate capital to create social and environmental improvements as well as financial returns.
LeapFrog Investments was one of the first private equity groups to specialise in impact investment and now manages about $1.6bn in assets. The new venture, Zamo Capital, will make equity and debt investments in impact specialists as well as provide expertise and support as they grow in size. The impact investment market is worth $502bn, according to the Global Impact Investing Network, an industry body.
Zamo has secured its first mandate from Big Society Capital, the social investment firm set up by financier Ronald Cohen, which has asked the new group to invest an undisclosed sum on its behalf. “As interest in the sector accelerates, we are looking to support the growth of high potential managers we see in our portfolio,” said Jeremy Rogers, chief investment officer at Big Society Capital.
Zamo’s name derives from a Zulu phrase mzamo, meaning “I will try”. The model will provide investors with an alternative way to tap a sector which is swelling due to increased appetite for responsible investment. Zamo will not allocate money to existing funds but will provide capital directly to the managers, aiming to help them grow bigger and at a faster rate.
Mr Roth said it would offer impact managers various options, including taking stakes in their business, buying out partners seeking to exit and providing funds for those focused on a particular sector such as healthcare to expand into others. He added that the fee structure will be determined case by case but was likely to be modelled on a traditional “2 and 20” management and performance fee structure.
Kathleen Mcleay, NCM’s chief executive, commented that “We are delighted to be involved with Jim and the team in bringing this unique new fund to close. NCM will provide accounting and administration services to the fund and look forward to reporting its growth and success. This is another third sector fund to add to our portfolio in this ever expanding investment category.”
For further information, find the complete Financial Times article here: https://on.ft.com/2NQdvkN