John Kerry Joins TPG’s $2 Billion Rise Fund as Senior AdviserBy
Private sector ‘best bet’ to address many social perils: Kerry
Former top diplomat to identify, advise portfolio companies
TPG’s Rise Fund has enlisted former U.S. Secretary of State John Kerry as a senior adviser, bolstering its credibility as the fund sets out to prove that financial returns and social good can go hand-in-hand.
Kerry said he will help identify investments and advise portfolio companies across Rise’s various sectors, with a focus on renewable energy opportunities. Foreign policy and economic policy are closely linked, and businesses that can empower people with job opportunities, create better access to health care and education, and develop more sustainable energy and infrastructure systems are essential to social stability, he said in an interview that included TPG Growth managing partner Bill McGlashan.
“The private sector is the best bet we have to try to save us from the worst downsides of some of these social, environmental, political challenges we face on a global basis,” Kerry said. “That is a bottom line reality that people need to really think about.”
Rise became the largest impact investing pool ever when it closed on $2 billion in October. The strategy, born out of private equity firm TPG’s growth investing efforts, aims to deliver both market-rate returns as well as measurable social and environmental benefits. The team, which has so far backed 11 businesses, invests across seven primary sectors: agriculture and food, education, energy, financial services, health care, technology and infrastructure.
More than a dozen advisers work with Rise, including former U.S. Secretary of Education Arne Duncan and Rick Levin, the former chief executive officer of online-courses company Coursera Inc. TPG, with main offices in San Francisco and Fort Worth, Texas, compensates senior advisers in a way that aligns incentives with performance for investors, according to a representative of the firm.
Kerry’s decades of political and foreign relations experience make him an ideal addition to Rise’s efforts, McGlashan said. The Vietnam War veteran and former Democratic Massachusetts senator played a central Obama administration role in negotiating the Paris climate accord and the Iran nuclear deal, among other landmark agreements.
“He understands the kind of collaboration we need to solve the pressing social and economic issues that we’re directing Rise towards,” McGlashan said. “He can bring government leaders together to help craft agreements and build consensus where they might not otherwise agree.”
“The world needs that perspective if were going to meet the challenges that we set out to address within the Rise fund,” McGlashan added.
Private equity firms, particularly larger ones with greater resources, are increasingly responding to investor demand for environmental, social and governance factors to be considered when backing businesses. Approaches vary in both method and rigor, but a growing number of firms are integrating such considerations into due diligence and operations.
Bain Capital and Partners Group Holding AG also have launched funds dedicated to impact investing. There are almost $23 trillion of assets globally being professionally managed under responsible investment strategies, up 25 percent since 2014, according to a 2016 report -- the latest available -- from the Global Sustainable Investment Alliance.
Kerry said he sees a growing willingness on behalf of most government leaders to sign on to more sustainable agendas. The key will lie in building businesses that can unlock trillions of dollars currently sitting on the sidelines, including vast sums currently sitting in negative-yielding bonds.
“There is a massive amount of money to be brought to the table and I think that will have greater impact on building global stability than almost anything else we do,” Kerry said. He added that “ain’t going to happen from the U.S. Congress’ budget.”