Tower Peak Partners seeding US social impact fund
Private markets asset management firm Tower Peak Partners has bought a portfolio of growth equity companies that provide employment and products to people and communities with disabilities that will seed a new US social impact fund.
Social impact funds are relatively rare, particularly in the US amid the Republican administration's pushback against sustainability. The new fund will be the first to target disabilities and is attracting interest from asset owners, according to TPP.
"I don't know any other social impact strategies in the market today that focus on persons with disabilities. No other funds have announced themselves as focusing on this type of target and initiative," said Anthony Catachanas, founding partner and CEO of TPP.
"The initial feedback from LPs has been excellent – they think that this particular type of strategy is perfectly on message with their respective impact mandates."
TPP bought the portfolio of minority stakes of 5%–15% in seven companies from New York-based Disability Opportunities Fund in a secondary private equity transaction. DOF is a venture capital, nonprofit community development loan fund that provides financing to increase access to affordable housing and services for people with disabilities.
The portfolio companies include No Limbits, an adaptive clothing company based in Richmond, Virginia, for amputees and wheelchair users; Minnesota-based Joshin, which offers virtual coaching and support for neurodiversity and disability; and California-based Opya, which specialises in early autism intervention and is backed by Tokyo-based SoftBank.
TPP is warehousing the portfolio, which it will use to seed the new US-focused social impact fund that it is planning to launch next year. The firm aims to expand its New York-based team during the next 12 months to accommodate the fund's buildout in addition to its offices in London and Rio de Janeiro.
The asset manager aims to increase some of the holdings to around 10–12 companies, contribute more equity growth capital and some of the investments will be used to seed the new fund over the course of next year.
The size of the new social impact fund has not yet been determined.
Still impactful
While many asset managers are choosing not to badge funds with sustainable labels in the current political environment in the US, TPP said the social impact label still carries weight.
"I think that the wise approach these days in the US is not to engage in the formal discussion of labelling but rather to provide a useful economic service to the US economy. If we adhere to that narrative, we find very little friction with the current US administration," Catachanas said.
"This fund is about helping to increase participation of a very capable and productive workforce in the US economy and I think that is relevant to anyone, so we're not afraid of holding that line in the current environment in the US. And so, with respect to labelling, this is a certainly a social impact strategy."
Tower Peak Partners was launched in June 2024 and mainly focuses on green transition. It operates as a private equity investor by taking minority stakes in industrial companies with enterprise values from US$50m to US$400m.
The social impact fund will be TPP's third fund. Its Industrial Transition Strategy private equity fund is about to reach first close and is an Article 8 fund under Europe's Sustainable Finance Disclosure Regulation. A US$300m unlabelled Global Rights & Intellectual Property strategy is in fundraising.