Prudential fund invests £5bn in private sustainable businesses

Global opportunities in privately owned businesses exposed to microfinance, affordable housing and energy from waste facilities

M&G has announced it will be allocating £5bn of savings held by UK customers within the Prudential With-Profits Fund to unlisted companies that are working to create a more sustainable world.

The group has created a 25-strong global investment team called Catalyst, with team members located in London, Singapore, New York and Mumbai, to analyse investments in private credit, real and financial assets and private equity.

See also: – M&G’s Constable-Maxwell: The industry is shifting focus onto positive outcomes

Sitting within the private & alternative assets arm at M&G, which manages £65.5bn on behalf of Prudential policyholders and external clients, the Catalyst team will seek global opportunities in privately owned businesses that otherwise may struggle to access capital needed to develop strategies and grow.

The team will have broad impact focus that encompasses ESG risk management through to positive impact for vulnerable groups, and will use the Impact Management Project’s investment classification framework to assess potential opportunities in three categories:

1. ESG – those businesses or assets that act to avoid harm.

2. Sustainable – those which benefit stakeholders by generating positive outcomes for people and the planet.

3. Impact – those contributing solutions to societal and environmental challenges. 

The screening used on M&G ESG funds, which exclude sectors such as gambling, tobacco and controversial weapons, will be used while team will also positively screen through M&G’s proprietary ESG scorecard, built on international SASB standards and the triple ‘I’ framework for impact investing.

Examples of investments in the pipeline include SME and consumer financing, such as microfinance and trade receivables, asset and development financing such as affordable housing and energy from waste facilities, and technology investments with a positive social or environmental purpose.

See also: – Private debt and the ‘greening’ of the British energy economy

John Foley, chief executive of M&G, said “more and more customers are asking us to make a positive difference to the world through sustainable investment, while also seeking good financial returns to underpin their retirement”. 

“Many of the most attractive opportunities to do this are in private assets – new and existing companies and platforms which are not listed on an exchange. As a cornerstone investor in such enterprises, M&G can have a much greater influence in supporting their growth and on sustainability than we can in public markets.”

The With-Profits Fund has £136bn in assets under management.

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Natalie Kenway

Natalie is global head of ESG insight for ESG Clarity and has been an investment journalist for 16 years. She won Editor of the Year at the Aviva Investors Sustainability Media Awards 2021, and was Winner...