Private equity has raised $2.4 trillion, and, seeing that they’ve spent $256 billion on buyouts this year, they aren’t afraid to spend it. As billions more are raised, companies focused on doing a social good have to be wondering how much they’ll get.
The Financial Times analysis of third-party data doesn’t break out social impact investing. It shows the PE industry thriving on record inflows from pension and other funds and fueled by cheap money, and suggests impact investing will rise with the tide.
- As deals are getting bigger, more questions emerge about “inflated internal rates of return” and “excessive management fees,” Institutional Investor reports.
- Leverage is increasing as more deals are being seen in the 6%-7% debt-to-ebitda range
- Karma Takeaway: More funds are being directed at impact investments, and the Global Impact Investing Network estimates the market at $502 billion as of the end of last year, with a subset seeing 17% annual growth over four years. With PE investors careful to cultivate an image of doing the right thing — which perhaps keeps regulators and others off of their backs — they may be on the lookout for opportunities.