Rest expands impact investment allocation through TowerBrook Delta fund commitment and co-investment

Rest, one of Australia’s largest profit-to-member superannuation funds, has added to its growing suite of impact investments with a commitment to a private equity fund expected to benefit from the long-term decarbonisation and deglobalisation of the global economy.

Rest has made a US$75 million commitment to international investment manager TowerBrook Capital Partners’ Delta private equity impact fund (Delta fund).

The Delta fund will invest in mid-sized private companies that are expected to generate strong long-term returns as well as contribute to at least one of the UN’s Sustainable Development Goals (SDGs). The fund will target opportunities in North America and Western Europe in sectors such as green industry and clean energy, education and human capital development.

In addition to the fund commitment, Rest will make a co-investment with TowerBrook in LiftWerx, a Canadian firm that specialises in servicing wind turbines with its ‘up-tower’ crane technology.

Rest Chief Investment Officer Andrew Lill said the deal aims to give Rest greater exposure to assets that are expected to benefit from three of the key ‘megatrends’ the fund believes will influence the global economy and society over the long term: digitalisation, decarbonisation and demographic changes.

“The TowerBrook Delta fund will look to invest in sectors of the economy at the forefront of the megatrend shifts now and into the future, such as education and human capital development, food and agriculture, healthcare and water, and the environment and clean energy,” said Mr Lill.

“We believe these megatrends will present investment opportunities for our 2 million members, many of whom are decades from retirement. The Delta fund will aim to identify innovative private companies that we believe will represent strong examples of these opportunities.

“Our co-investment in LiftWerx is also an example of a company we expect to benefit from decarbonisation, through its innovative, cost-effective solution to maintaining wind turbines.

“This commitment also moves us closer to reaching our target of a one per cent allocation to impact investments across the fund’s total portfolio by 2026.”

Rest defines impact investments as investments made in members’ best financial interests, to provide a financial return and which come with a secondary aim to generate a social and/or environmental return.¹

TowerBrook is a London and New York -based investment manager that specialises in private equity impact investments. In 2019, it received B Corp certification for achieving high standards of verified environmental and social performance, accountability, and transparency.

Rest aims to contribute to a more sustainable future through alignment to five of the UN SDGs, of which four are also identified in TowerBrook’s impact strategy. The SDGs both organisations are aligned to are SDG 7: ‘Affordable and Clean Energy’, SDG 8: ‘Decent Work and Economic Growth’, SDG 10: ‘Reduced Inequalities’, and SDG 13: ‘Climate Action’.

“We are delighted to have Rest investing in our Delta fund and as a co-investor in LiftWerx,” said Gordon Holmes, Chief Investment Officer at TowerBrook. “The Delta fund gives us the opportunity to partner with younger, innovative companies that are committed to commercial success while making a positive and lasting contribution to society or the planet. LiftWerx, the third investment for Delta, is a great example of such an opportunity, providing a solution that is not only faster and cheaper than the existing alternatives but is also safer and more environmentally friendly, helping to drive the energy transition.”

LiftWerx is based on Ontario and has developed proprietary up-tower cranes, which are designed to be a more cost-effective and environmentally friendly alternative to mobile cranes for servicing wind turbines. The up-tower cranes are safer and can operate in higher wind speeds, and on more days of the year.

This is Rest’s second private equity impact investment, following a commitment to specialist private equity firm ARCHIMED. Other impact investments in the portfolio include a listed equities mandate with Ninety One, and commitments to the LOGICs industrial property fund, the agriculture-focused Cibus II Fund and the unlisted infrastructure Palisade Impact Fund.

¹ For more information about impact investments, please refer to page 6 of Rest’s Responsible Investment Policy or refer to this article What is impact investing?