Specialist alternatives fund manager RM Funds has today (22 February) launched its Impact Credit fund, which will aim to fund businesses making a "clear contribution" towards achieving the UN's Sustainable Development Goals.
The vehicle, which is targeting a fundraise of up to £200m, will provide non-benchmark-sized loans of up to £15m to companies focusing on social and environmental infrastructure.
The impact objectives it will focus on are improving the supply of quality affordable housing and accommodation; childcare and education services; health and social care; the availability of energy, recycling, waste and sustainable water solutions; and the sustainability of buildings and transport.
Alongside the use of the SDGs, the fund will make "a proactive, meaningful contribution" to improving core borrowers' ESG practices via its positive screening process and through engagement with firms' management teams.
It will also track impact metrics and utilise a scoring system aligned with global initiatives, including the Principles for Responsible Investment and the Impact Management Project.
For third-party assurance of its impact management and measurement framework, RM funds has teamed up with The Good Economy which will monitor the fund's process and provide an independent review to its investors on an annual basis.
RM Impact Credit will seek to achieve defensive, positive returns for investors, targeting a net income of 6% and a total return of 8%-10% per annum.
James Robson, RM Funds' chief investment officer, said: "Despite being one of the world's most advanced economies, the UK faces a range of pressing social and environmental challenges, not least arising out of growing social and economic inequality, meaning many people and parts of the UK are at risk of being ‘left behind'.
"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.
"We are delighted to launch the RM Impact Credit fund to fill this significant funding gap which we refer to as 'the missing middle'; providing crucial funding to quality UK businesses, and delivering triple bottom line stable returns for investors, with clear positive outcomes for people and the planet."
The fund launch comes three months after the firm unveiled its VT RM Global Real Opportunities fund, which focuses on real assets and some equities in sectors supported by "long-term structural growth drivers" such as industrial digitisation, sustainability (including utilities, renewables and energy efficiency) and socio-demographic change.