In a first for India, three former TATA group executives have tied up with a mutual fund to launch a $1 billion sustainable investment fund.
Three former TATA group executives, Mukund Rajan, Govind Sankaranarayanan and Alan Rosling, have joined hands with Quantum Advisors to launch a fund with a corpus of $1 billion to invest in publicly listed companies. Quantum Founder and Indian mutual fund industry expert Ajit Dayal will lead the investment team of the ESG (environmental, social and governance) fund.
A press statement on the matter said,
"The joint venture will launch a $1 billion public equities fund with a distinctive style of engagement comparable to a private equity approach, to influence strategy and enhance ESG performance at India Inc."
The fund will reach out to long-term capital sources such as pension funds, insurance companies and others, which are willing to stay invested for at least five years and more, a person close to the fund told YourStory. Quantum Advisors has traditionally used governance as a criterion for investment decisions. However, there are presently no ESG funds with an active engagement strategy focused on India.
In a statement, Mukund Rajan said that the focus on ESG offers a new and much-needed mantra for sustainable investing and better risk-weighted returns to investors.
"Aligning this with an active engagement style will help to push the larger agenda of improving the quality of life of the communities served by companies we invest in, and a better environment for our common future,” he added.
The fund will also collaborate with other stakeholders, including other investors, the government, the regulators, and multi-lateral institutions. The goal is to ensure that the companies it invests in adopt the best practices on the environment, social and governance fronts. It will drive change in a company's workings by working with promoters, boards and managements through a slate of senior operating partners and a blue-chip advisory board.
The new fund will seek to demonstrate that driving beneficial ESG outcomes delivers strong financial returns and that, in India as elsewhere, you can do well and outperform by doing good, the statement said.
Mukund Rajan was earlier Chairman of the TATA Global Sustainability Council, Chief Ethics Officer, and Head - International Operations at the TATA Group under former Chairman Cyrus Mistry. Sankaranarayanan was COO at TATA Capital while Rosling was a director at TATA Sons. The others in the team include Harish HV, who had developed and built the financial and advisory practice of Grant Thornton and Shankar Venkateswaran who was the chief of sustainability at Tata Group.