Private Equity Backs Health, Zero Hunger & Innovation.

According to Phenix Capital’s latest impact report, Zero Hunger 712 private Zero Hunger equity impact managers have generally raised €214 billion in capital over the past decade.

Impact investing continues to shape the financial landscape, with private equity funds leading the charge in directing capital toward sustainable development goals (SDGs). According to a new report from town-based investment counseling. Phenix Capital, Good Health & Wellbeing (SDG 3) was the top investment pick among private equity impact investment managers last year, followed closely by Zero Hunger (SDG 2) and Industry, Innovation, and Infrastructure (SDG 9). This shift in priorities underscores the growing commitment of investors to addressing critical global challenges.

Key Trends in Private objectivity Impact Investing

Private Equity: The Preferred Strategy for Impact Investors
The Phenix Capital report highlights that private equity remains the dominant strategy for impact investing, accounting for 53% of all funds in the database. Over the past decade, the number of private equity impact funds has surged by 219%, reaching a total of 1,459 funds. Currently, there are 712 private equity impact managers who have collectively raised an impressive €214 billion in capital.

Regional Investment Focus
Europe is leading the way in investments targeting Good Health & Wellbeing, with 430 private equity funds dedicated to this SDG. North America follows closely with 341 funds, while 206 funds are headquartered in Asia. This distribution reflects the widespread recognition of healthcare as a crucial area for sustainable investment across various markets.

Breaking Down Investments in Health & Wellbeing
Among the funds focusing on Good Health & Wellbeing (SDG 3):

These investments play a vital role in step up healthcare Zero Hunger systems, improving medical access, and addressing emerging health challenges worldwide.

A Shift in SDG Priorities
Last year saw a reshuffling of top investment priorities, with Zero Hunger (SDG 2) moving up from third place to second in investor interest. This shift suggests that addressing food security is gaining increased attention among private equity impact managers. At the same time, Industry, Innovation, and Infrastructure (SDG 9) continues to be a strong area of focus, particularly for charity funds and family offices.

However, the report also highlights a stark contrast in Zero Hunger investor commitments. Natural capital investments remain significantly underfunded, with only 506 fund commitments to Life Below Water (SDG 14) and 338 to Life on Land (SDG 15). This discrepancy underscores the need for more targeted efforts to direct capital toward biodiversity conservation and climate resilience.

Investor Preferences by Sector
1. Investor interest in specific SDGs varies by institution type:

2. benefit funds and family offices favor Industry, Innovation, and Infrastructure (SDG 9).

3. DFIs are the only investor type with a notable focus on Decent Work & Economic Growth (SDG 8), highlighting their role in supporting job creation and economic stability in developing regions.

Challenges Facing Private Equity Impact Funds
Despite the substantial growth in private equity impact investing, macroeconomic conditions have slowed the momentum of new fund launches. The report notes that the number of private equity impact funds grew by only 0.34% last year, reflecting investor caution amid economic belief.

However, there is optimism that private equity will remain a key strategy for impact investing. Recent interest rate cuts in Europe and the US have created a more favorable environment for dealmaking, and investors appear to be returning to private equity Zero Hunger strategies after a temporary slowdown.

Political Uncertainty and Its Impact on Investments
While economic conditions may be building, the report warns that political decisions—particularly in the United States—could have long-term effects on impact investing. The Trump administration’s support for oil and gas industries and its withdrawal from key global agreements, such as the World Health Organization and the Paris Climate Accord, may negatively impact investments in sustainability-focused funds.

As global markets navigate these uncertainties, investors will need to adapt their strategies to ensure long-term success in impact investing.

Conclusion

Private equity continues to be a driving force in impact investing, with Good Health & Wellbeing, Zero Hunger, and Innovation & Infrastructure emerging as top priorities. While private equity funds have demonstrated remarkable growth in the past decade, the slowdown in new fund launches highlights the impact of economic and political challenges on investment trends.

Despite these obstacles, the demand for sustainable investment remains strong, and investors are slowly aligning their portfolios with global development goals. However, areas such as natural capital and biodiversity conservation require more attention and funding to ensure a truly balanced approach to impact investing.