Private equity heavyweight CVC – the former co-owner of Formula 1 – has bought a $200m stake in sustainability ratings firm EcoVadis, in the latest in a string of investments into ESG data and analysis companies.
The investment is the debut deal by CVC’s second ‘Growth Partners’ fund, and the deal is set to close this quarter. No further terms were provided, but French-based EcoVadis will use the money “to scale globally and engrain sustainability, fair labour practices and ethics into enterprise supply chains and business commerce,” according to a joint statement from the firms.
"At the core of CVC’s approach is always a detailed sustainable value creation plan that is anchored in fundamental ESG principles."
Launched in 2007, EcoVadis is not a well-known name in the ESG data landscape but it claims 450 institutions use its supplier ratings and engagement platform. It assesses 60,000 companies in 155 markets – 10,000 of which it says it added last year – and has offices in Paris, London, Poland, Tunisia, Tokyo, Toronto, Mauritius, Hong Kong, New York, San Francisco and Melbourne. It plans to expend into new countries following CVC’s backing, it said.
CVC is represented on the Private Equity Advisory Committee of the Principles for Responsible Investment (PRI). Sebastian Kuenne, Managing Director who leads CVC Growth Partners in Europe, said: “At the core of CVC’s approach to building better businesses is always a detailed sustainable value creation plan that is anchored in fundamental ESG principles.”
CVC’s current investments include gambling companies Sisal and Tipico, private healthcare provider Siloam International Hospitals, and oil & gas company Neptune Energy Group, whose “ambition is to create a leading international independent exploration and production company within the next five years”. It sold out of Formula 1 to Liberty Media in 2016 though it currently owns Premiership Rugby.
“ESG issues are critical to business success, economic growth and societal improvement,” observed Kuenne.
There has been a major increase in M&A activity in the ESG ratings space over recent years. Just yesterday, RI reported that DWS Group, formerly Deutsche Asset Management, had acquired nearly 25% of ESG-focused start-up Arabesque AI.
Last year, DWS bought into Arabesque AI’s parent company, alongside Allianz X, Commerz Real and the German State of Hessen.
Trucost, South Pole, Sustainalytics, Grizzly Ratings, Carbon Delta, Beyond Ratings, oekom, GMI Ratings, Vigeo Eiris, Solaron and Minerva have also been party to acquisitions or significant investments since 2015.