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(Bloomberg) — Adam Wolfensohn and Jason Scott hatched a plan to invest the money of wealthy families and tackle some of society’s most complex challenges as they biked the six miles together each day from their Brooklyn homes to offices in Manhattan.
The duo decided to merge Wolfensohn’s private-equity fund that invests in clean energy and financial services in developing countries with Scott’s Eko Asset Management Partners, which specializes in environmental markets such as sustainable fisheries and forestry. The new firm, which started today under the name of Encourage Capital, expects to attract more than the $250 million they’ve raised separately over the past seven years by offering a wider range of investments.
“They are people with the skills of investment bankers who want to make the world a better place,” said Mark Tercek, chief executive officer at the Nature Conservancy and a former Goldman Sachs Group Inc. executive for 24 years. “They are in a position to facilitate, and by God I think they are going to be successful.”
The firms are joining at a time when the world’s richest people have more than $152 trillion at their disposal and a small but growing number of them are looking to use their fortunes to eradicate disease, lift people out of poverty or combat climate change — while also making a profit. The rising interest in impact investing is also increasing competition. The number of money managers like Encourage has more than doubled in the past six years to 449, according to Cambridge Associates.
Wolfensohn Fund Management was founded by former World Bank president James D. Wolfensohn in 2008. Its main fund has invested in renewable energy and companies in emerging markets such as Ujjivan Financial Services, which lends to poor women in India.
Eko, an investment management and advisory firm, was co-founded in 2007 by Scott and Ricardo Bayon. It’s bought carbon credits for California as well as received grants to design financing strategies for fisheries conservation in Latin America and the Philippines from organizations including the Rockefeller Foundation and Bloomberg Philanthropies — the charitable vehicle for Michael Bloomberg, the majority owner of Bloomberg LP, which is the parent company for Bloomberg News.
“This isn’t about, it would be nice to solve these problems,” said Scott, 46, of issues such as over-fishing and land conservation. “We have to solve them. That will ultimately result in more long-term, sustainable capital markets.”
Tercek, whose Nature Conservancy has an operating budget of almost $600 million, said impact-investing firms are helping nonprofits raise capital efficiently.
Last year the Arlington, Virginia-based outfit collaborated with Eko and others including JPMorgan Chase & Co. to start NatureVest. Through the program, the Nature Conservancy has purchased land in Washington state and Montana for $134 million, and made a $7 million investment in supply-chain access for pastoralist cattle herders in Kenya.
Much of the money raised was from investors willing to accept lower-than-market rate returns because they expect an environmental benefit, said Tercek, whose roles at Goldman included head of the equity capital markets and corporate finance units.
Encourage Capital will be based in New York. It plans to retain employees of both firms and pursue new investment opportunities, according to a statement. Wolfensohn, 44, and Scott are co-managing partners of the new firm with Bayon as chief impact and innovation officer.
“We can build a world class asset manager that is scaled, impactful and profitable,” Wolfensohn said in an interview.
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