Schroders acquires majority stake in Swiss impact investor BlueOrchard

Venerable fund manager buys into firm that was originally set up by UNCTAD

Schroders, the FTSE-listed asset manager with £421.4bn (€469.5bn) under management which traces its roots back to 1804, has acquired a majority stake in Zurich-based microfinance and impact investment pioneer BlueOrchard for an undisclosed sum.

BlueOrchard – which has $3.5bn in assets under management — was founded in 2001 by initiative of the United Nations Conference on Trade and Development (UNCTAD) and is the world’s first commercial manager of microfinance debt investments.

It offers credit, private equity, sustainable infrastructure and ‘blended finance’ mandates for clients such as the Japan International Cooperation Agency, Sumitomo Life and other Japanese institutional investors for the Japan ASEAN Women Empowerment Fund.

Under the deal, Schroders’ CEO Peter Harrison will join the BlueOrchard board, as will Global Head of Private Assets Georg Wunderlin and Stephen Mills, executive chairman of the firm’s private equity platform Schroder Adveq.

Peter Fanconi, the ex-Vontobel executive who was formerly CEO of Blue Orchard and who became chairman in 2015, remains chair while Patrick Scheurle, who is also ex-Vontobel, remains CEO.

Also on the board at BlueOrchard is Naïm Abou-Jaoudé, the CEO of fund manager Candriam, the former Dexia Asset Management that is now part of New York Life.

The new board, comprising both BlueOrchard and Schroders representatives “will adopt joint strategic decisions” while a joint statement talks of “sharing values and the desire to generate substantial impact together”.There will be no changes to the management team, processes or strategies that BlueOrchard manages, the companies said.

Harrison said BlueOrchard is a “blueprint for the future of our industry”.

Fanconi added the firm’s mission is 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.”

Financial terms of the transaction are not disclosed and the acquisition is expected to complete in the second half of 2019 subject to usual closing conditions, including regulatory approvals.

Earlier this month, BlueOrchard said its flagship fund, the BlueOrchard Microfinance Fund (BOMF), had “delivered a strong social and financial performance” having exceeded the $2bn investment mark in June 2019.

The firm was among the first signatories to the new Operating Principles for Impact Management initiated by the International Finance Corporation. Its Chief Investment Officer Maria Teresa Zappia will be on principles’ Advisory Board.

This week Schroders released its latest Climate Progress Dashboard. It found that national zero emission commitments stand in contrast to the sharp growth in energy produced by fossil fuels.