Global Impact Funds have seen strong growth over recent years. Impact vehicles target the full gamut of private market strategies (e.g. private equity, venture capital), global geographies, and impact categories. It’s estimated impact funds are now $286 billion in size, comprised of $212.9 billion in unrealized investments and an estimated $73 billion in dry powder. When looking at capital raised for impact funds by private market strategy, PE represents the highest share at 39%, real assets accounts 28.5% and venture capital 14.8%. By category, in the last five to 10 years, agriculture, climate, and diversity and inclusion have accounted for the largest proportion of impact funds.
Chart 17: Global Impact Fund AUM ($B)
Traditional venture capital firms have never faced more competition, a dynamic that has given rise to hastier and pricier deals that are frequently led by non-venture investors. This combination of demand for capital, strong returns, more moderate risk, and an opportunity to invest for the long term have created prime conditions for private equity and other growth-oriented investors to pile into venture capital. There’s little evidence of a reversal any time soon: In 2021, fundraising for PE growth and expansion funds is nearing a record, with $39.5 billion raised across 63 funds as of early September.
Chart 18: PE Growth Funds approach record year
Supply disruption across global energy markets have seen price spikes from natural gas to thermal coal and now crude oil prices are starting to catch up too. Shortages in stockpiles of natural gas, widely seen as a key transition fuel on the path to net zero emissions, have fallen to record lows on the back of disruptions from both Russia and China. Whilst oil markets are now dealing with supply disruption in the aftermath of Hurricane Ida in the Gulf of Mexico and disappointing output from OPEC+ members recently which could see prices rise above $80 in the near term.
Chart 19: Prices spike across the energy complex