Singapore-based private equity (PE) manager Azalea Investment Management Pte. Ltd. (Azalea) said Wednesday it has launched the Altrium Sustainability Fund I (ASF I), which will invest in environmental, social and governance (ESG) focused opportunities to achieve positive environmental and social outcomes alongside private equity financial returns.

ASF I is a PE fund-of-funds product that enables institutional and other accredited investors to build an ESG-focused investment portfolio, Azalea said in a statement.

The fund is co-seeded by sponsor, the Azalea Group, together with homegrown financial services company Singlife with Aviva. Each party has committed $50 million to kick off the fund.

Azalea said increasingly, investors are heeding the call for responsible investing as it is recognised that generating sustainable returns over the long term depends on stable, well-governed social, environmental and economic systems, and ASF I is focused on funds with managers that invest in companies that not only incorporate ESG factors in business decisions, but are also committed to investing purposefully to create lasting positive environmental and social impact.

It said ASF I will back funds which invest in scalable, commercial solutions to solve pressing issues across its five core themes of climate, resource management, healthcare, education, and financial inclusion. Azalea will select high quality managers that address the global challenges encapsulated in the United Nations (UN) Sustainable Development Goals for ASF I. The fund will focus primarily on buyout and growth strategies, leveraging on the strength and technical expertise of these managers to generate PE market returns.

“Private equity is uniquely positioned to be a force for good through its long-term investment horizon and innate appetite for value creation. Investing through a sustainability lens not only builds a forward-looking portfolio, it also assures enduring value, thus enhancing the likelihood of resilient returns. Through ASF I, investors share our vision to drive positive impact through collaboration with multi fund managers. We are very pleased to have like-minded investors like Singlife with Aviva join us on this journey,” said Margaret Lui, Chief Executive Officer of Azalea.

Pearlyn Phau, Group Chief Executive Officer of Singlife with Aviva, said Singlife is committed to creating a long term positive impact through our sustainability agenda.

“As a homegrown financial services brand, we also want to contribute to Singapore’s Net Zero goal by 2050. In addition to measuring the carbon footprint of our global investment portfolio, we are actively seeking responsible investment opportunities and are pleased to work with Azalea in shaping our collective future through ASF I,” she said.

Sustainability is a key strategic pillar at Singlife as it strives to create long term sustainable value for stakeholders by embedding sustainable practices in its investments. The firm is proud to be a Task Force on Climate-Related Financial Disclosures (TCFD) Supporter and is working to become a signatory of the UN Principles for Sustainable Insurance by the fourth quarter of 2022.

In addition to ASF I, Singlife has also recently seeded two sustainable funds and will continue to pursue ESG-focused investments. In November 2021, it announced its participation in the Monetary Authority of Singapore’s Project Greenprint. This uses real-time data in the transport and logistics sector to monitor emissions and to review if the data can enhance underwriting and reduce premiums for the sector. The firm will also announce partnerships with social service organisations this year to launch programmes to enable financial inclusion through literacy workshops, health and mental wellness coverage and environmental sustainability.

“The principles of ESG are at the core of Azalea’s mandate. Since its inception in 2015, Azalea has been designing products and platforms to promote financial inclusiveness in private equity, starting with the Astrea PE bonds. The Astrea PE bonds provide retail investors exposure to PE at an affordable level through bonds backed by diversified portfolios of PE funds. Accredited investors can also access PE through Azalea’s Altrium PE Fund, which concluded its Fund II fundraise recently in December 2021,” said Lui.

In line with Azalea’s commitment to ESG, Azalea became a signatory to the Principles for Responsible Investments (the PRI) in 2021, a UN-supported global investor initiative that works in partnership with the UN Environment Programme (UNEP) Finance Initiative and UN Global Compact to promote the incorporation of ESG factors in investment and ownership decisions.

Azalea also signed up to the ESG Data Convergence Project, which seeks to standardise ESG metrics and provide a mechanism for comparative reporting for the private market industry. The collaboration now represents over $8 trillion in asset under management (AUM) with involvement from firms including Carlyle, CVC and EQT AB.

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