Swiss wealth and asset management firm Pictet has successfully raised $253 million in the final day of its Environment Co-Investment Fund I, surpassing its initial fundraising goal of $200 million. The new fund, led by Pictet Alternative Advisors, is the first environmental co-investment fund that the firm has launched, and will target companies working on the solutions to pressing environmental challenges. As demand for sustainability assets continues to grow, so does investor appetite for environmental investment funds, sustainable investing, private equity, climate solutions, and circular economy opportunities.

This fund brought together a broad base of institutional and private investors, such as insurance companies, pension funds, private and family investors from Europe, Asia, North America and the Middle East. The positive sales response comes as investors remain interested in sustainable investing, private equity, environmental investment funds and strategies for circular economy that offer environmental goals in tandem with long-term investment opportunities, the company said.

Awards for financing companies that are working on environmental solutions.

Pictet said the Environment Co-Investment Fund I had been created to invest with existing private equity managers in firms that offer solutions to significant environmental problems. The fund will invest in companies in the areas of greenhouse gas reduction, pollution control, circular economy, sustainable solutions for consumers and enabling technologies.

The investment philosophy is designed to offer exposure to a portfolio of private companies that are creating technologies and services that align to environmental sustainability and are driven by long-term structural trends. The fund has been set up to leverage on the expertise of the private equity sponsors who have access to other companies that might not be accessible to others.

Concentrate on North America and Europe.

This will likely be largely in North America and Europe, where private equity has remained a strong force in the environmental technologies and sustainable infrastructure sectors, according to Pictet Alternative Advisors.

This fund will invest in various transaction types, such as, buyouts, growth investments in late-stage and selected late-stage venture. The fund's diversified investment strategy is designed to enable it to invest in companies at various stages of development and still focus on commercially established companies with growth potential.

In addition, Pictet also announced that, currently, some 50% of the committed capital has been utilised through eight investment transactions, which signals the fund's early ramp up from its fundraising to capital deployment process.

Co-Investment Model Targets Privately Held Businesses

The company said that there are many companies that are developing solutions in the fields like electrification, water management, waste management, environmental services and resource efficiency that are still privately owned. This makes traditional investors reluctant to invest in these companies through the public market.

Pictet says that the co-investment approach provides investors with direct access to these businesses through investing alongside well known private equity firms on a deal-by-deal basis. The method has been designed to offer more transparency regarding the investments underlying the approach and to enable investors to engage in carefully selected transactions, not in a general private equity portfolio.

This approach has become more popular as investors look to increase transparency around where investments are going and how the portfolio companies are advancing long-term environmental goals.

The need for more investments is reflected in investor interest.

The fund was well received by existing and new investors, commented Nicolas Thomas, Principal of Pictet Alternative Advisors' Thematics Private Equity.

The fundraising result "shows the growing need for co-investment opportunities, and the confidence in the Company's capability of finding and analyzing investment opportunities," he said. Thomas states that investors are also growing more interested in access to high-quality private companies, and a desire for greater information about the assets and capital allocation.

The surge in interest in environmental investment strategies is also reflected in broader investment trends, as institutional investors remain to invest in areas related to climate transition, resource efficiency and sustainable technologies.

Fits in Sustainable Investment Framework.

The Environment Co-Investment Fund I meets the disclosure standards set by Article 8 of the Sustainable Finance Disclosure Regulation (SFDR), the EU sustainable finance disclosure regulation, said Pictet.

By the end of its investment period, the company said that the fund will have a minimum of 80% of sustainable investments in accordance with the company's Sustainable Investment framework.

The fund launch and successful closing coincide with the ongoing expansion of investments in private markets geared towards environmental innovation. In the present context, as governments, business and investors are gearing up to help solve the climate change problem, pollution and resource efficiency, specialised investment opportunities have taken an increasing importance in directing investment into companies that create technologies and services that contribute to addressing environmental issues.

Pictet's Environment Co-Investment Fund I has invested half of its capital and its portfolio includes pipeline companies active in the environmental solutions business, with plans for further investments in privately-owned companies that seek to solve environmental problems in the world.