UK-based alternatives manager RM Funds has launched an impact credit fund seeking up to £200 million ($282 million; €232 million).
The RM Impact Credit Fund will provide funding for UK businesses that make tangible, positive contributions to ESG outcomes linked to specific sustainable development goals. Loans will be worth up to £15 million and will focus on social and environmental infrastructure themes.
Impact objectives will include: improving supply of quality affordable housing; childcare and education services; health and social care; energy, recycling waste and sustainable water solutions; and sustainable buildings and transport.
The fund will also be proactive in improving core borrower ESG practice by actively engaging with management teams and tracking impact metrics.
Alongside sustainable development goals, the fund will have an impact scoring system aligned with recognised global standards including the Principles for Responsible Investment and the Impact Management Project.
The Good Economy will provide third-party assurance for the impact measurement framework including annual reports to investors to provide an independent verdict on the fund’s impact performance.
The fund aims to generate a stable net income of 6 percent and an 8-10 percent total return a year. It will focus on defensive sectors and will use covenants and secure loans against tangible assets.
James Robson, chief investment officer at RM Funds, said: “There are many businesses across the UK which are still underserved by traditional lenders, with borrowing requirements that are too complex for traditional bank lending and too small for institutional direct lending.”
He added that the RM ICF will aim to fill that funding gap while providing positive outcomes for people and the environment.