ESG and a loud bark
How Bluebell use their ESG investment strategy to drive returns, visibility and impact
Following on from last post’s learning from other industries theme we wanted to share an amazing bit of ‘growth-hacking’ from an unexpected source: activist investor, Bluebell Capital Partners. Please note: there’s no affiliation whatsoever between Bluebell and Tikto.
First, the scene. To the surprise of no-one: ESG and the broader sustainability agenda has become more popular in recent years. Taking some data from Google Trends (healthy pinch of salt) search volumes from the UK on the subject have 4.5x’d in the 4 years since 2019.
Alongside this increased base-level of engagement: comments, posts, discussions, events, wider media, and investment strategies concerning ESG have enjoyed ever-greater support.
You have probably found that ESG related content performs well on platforms like LinkedIn. Our Tidbit on ESG investing in SMEs was last year’s 2nd best performing post. Investors have been richly backing the strategy with assets held under ESG mandates having ~doubled in the last 5 years. The topic receives top-billing at Davos. The UN COP conferences are so much more visible now than ever before, save perhaps for Kyoto 1992.
ESG drives interest and engagement from supporters, detractors and commentators alike. If you’re an ESG investor, you also want to drive interest and engagement: to raise funds, to keep making investments, to increase impact. That’s a neat coincidence. Neither do we see any exploitation here. Provided the ESG focus is authentic one benefits the other, and so on.
Bluebell’s loud bark
The best use of an ESG strategy and message to drive greater visibility that we’ve seen is from a little known activist investor called Bluebell Capital Partners.
Bluebell’s mission is simple:
bring the value of North American-style shareholder activism to Europe
focus on ESG
While this simple and elegant strategy doubtless drives focus, it also drives extraordinary engagement by virtue of focusing on ESG issues. Bluebell have remarkably small assets under management (AUM) of ~€100m. Typically a fund of that size would barely make a ripple in public markets discourse. However because of their strategy they receive a massively disproportionate amount of attention which helps to drive that strategy’s success.
Here’s an assortment of the coverage that this firm has received:
I’ve chosen 3 excerpts from the FT, Bloomberg and a joint press-release with Solvay (a world leading chemicals business) though the internet is awash with coverage from great sources. Having worked in an equivalently sized fund in the past, I can tell you first-hand how difficult it is to achieve this level of (positive) coverage.
The attention helps to magnify the issues at hand and to ultimately drive the fund’s aims and the broader ESG agenda though this mechanism:
(1) Take a small stake in a Company-X that has an ESG issue
(2) Shout about the issue(s)
(3) Get Coverage, onboard other like minded shareholders + the court of public opinion
(4) Issue becomes large enough for Company-X to do something about it
(5) Remediation happens, agenda having been propelled by Bluebell
(6) Assuming good strategy, returns come in the form of capital appreciation or income
(7) Assuming good returns, more capital can be raised, more issues highlighted, greater ESG impact, greater returns
This is a fabulous example of using an important and popular issue + someone else’s platform (in this case: large corporate business’ shareholder base and extended network + the financial/wider media) in order to drive value.
While the learning that we’re highlighting here comes from the large-cap investing world, it’s easy to see how owners of businesses of all sizes can use the foundations of this strategy to drive value into their own business. Indeed while funds don’t neatly fit in the “SME box” Bluebell itself is somewhat of an SME: assuming their AUM to be €100m their annual revenues (management fee) will be in the small number of millions.
Tikto
At Tikto, we purchase majority stakes in EBITDA profitable businesses and follow that up with incremental growth capital. We bring our network of experienced operators to help execute a business plan for the next phase of our portfolio companies’ growth.
Get in touch: hello@tiktocapital.com