Global asset management group Schroders is set to acquire a majority stake in impact and microfinance investment management specialist BlueOrchard, the firm that is also the manager of the InsuResilience fund.
Schroders said the move further accelerates its growth in the private assets arena and also in impact investing in emerging markets.
It comes shortly after Schroders announced that it is lifting its ownership stake in Swiss ILS & reinsurance investments specialist Secquaero Advisors AG to 100%, another piece of its private asset growth strategy.
Founded in 2001, BlueOrchard is considered among the pioneers in microfinance and impact investing.
It offers its investors premium impact investment solutions across mainly microfinance linked asset classes, including credit, private equity and sustainable infrastructure. It is also expert in delivering innovative blended finance mandates.
Swiss headquartered, BlueOrchard’s impact investment business has around US $3.5billion in assets under management as of May 2019.
Schroders said the BlueOrchard transaction will enable it to “better serve clients who are increasingly seeking investments which have a beneficial impact on society and the environment, as well as generating positive financial returns.”
While BlueOrchard sees opportunities to leverage the scale of Schroders to innovate further in its impact and microfinance investment areas.
It’s an interesting tie up, given Schroders is also very active in the insurance and reinsurance linked investing space, including in catastrophe bonds and other insurance-linked securities (ILS).
BlueOrchard manages the Luxembourg-based InsuResilience Investment Fund, which was established by KfW, the German Development Bank.
The fund has a mandate to “contribute to the adaptation to climate change by improving access to and the use of insurance in developing countries.”
It’s clear how insurance-linked securities (ILS) can play a role here, given their ability as an asset class to mobilise private capital to protect against climate and catastrophe risks.
The InsuResilience Fund had originally been focused on climate insurance and BlueOrchard partnered with Swiss weather index insurance and derivatives, as well as data, provider CelsiusPro on this.
The pair continue to work together on the InsuResilience Fund, although its mandate has changed somewhat since its the pair began working together on the climate insurance linked fund in 2015.
The InsuResilience Fund also delivers some capital to back the African and Asian Resilience in Disaster Insurance Scheme (ARDIS) parametric insurance program, that features Global Parametrics as a key facilitator.
So BlueOrchard clearly has links to the insurance and reinsurance space and even tangentially through its investments to ILS of sorts.
BlueOrchard and the InsuResilience Fund are also exponents of the sustainable development goals (SDG’s), another area that the ILS market is showing increasing interest as some investors believe catastrophe risk transfer in ILS or cat bond form meets a number of the SDG’s.
With ILS and catastrophe bonds increasingly seen as responsible or even impact investments by some major institutional allocators, it will be interesting to see whether any synergies emerge between the ILS operations at Schroder Secquaero and BlueOrchard once it become majority owned by Schroders.
Peter Harrison, Group Chief Executive of Schroders, said of the deal, “Schroders has a strong belief in the value that investment can create in society, particularly within emerging and frontier markets. BlueOrchard’s expertise in this area is exceptional. They share our values, recognising that through our combined contributions, we can purposefully affect positive change. They are a blueprint for the future of our industry and we are delighted to partner together.”
Peter A. Fanconi, Chairman of BlueOrchard, added, “For nearly 20 years it has been BlueOrchard’s vision and mission to reduce poverty and protect the planet, while providing attractive returns for investors. With Schroders we have found the ideal strategic partner with whom we will further increase our impact and jointly contribute to the achievement of the UN Sustainable Development Goals. We are very pleased that amongst others, Peter Harrison, Schroders’ Group Chief Executive, will join BlueOrchard’s Board of Directors and look forward to jointly develop our business and ultimately drive the growth of the impact investing industry.”
Patrick Scheurle, CEO of BlueOrchard, commented, “We are delighted with today’s announcement. Schroders’ stable ownership structure and heritage, which is closely aligned with BlueOrchard’s long-term investment philosophy makes them an excellent partner for our business. With the backing of such a strong and like-minded institutional partner, we will be able to further drive innovation and growth and increase our impact substantially, while retaining our investment and operational autonomy. We look forward to continuing to provide an excellent service and the best possible impact investment solutions to our clients.”