Ares-backed Volery helped RRG raise $900m debut fund

Managing partner Emanuel Citron says ag and water are both of interest to the firm’s strategy of pursuing impact through investments into asset managers and financial services firms.

Volery Capital, a strategic partner of Ares Management, was among the companies that helped Renewable Resources Group raise its $900 million debut co-mingled fund, said its co-founder.

Volery said in an early March statement it “worked closely” with RRG on the Sustainable Water Impact Fund, which is among two investments the Greenwich, Connecticut-headquartered firm has carried out since its founding in 2017.

Volery describes itself as an impact private equity firm seeking market rate returns from growth and later stage investments into asset management, financial services and specialty finance firms that “benefit people and the planet.”

The firm’s sectors of focus include energy transition, workforce education and financial inclusion, as well as a resource efficiency grouping that includes sustainable food and agriculture, natural resource conservation and the circular economy.

Managing partner Emanuel Citron told Agri Investor agriculture is attractive for a number of reasons and Volery’s strategy is open to any subsector within its target markets that provides potential for market rate returns.

He declined to discuss the firm’s role in RRG’s debut fund or the investment vehicles that have supported Volery’s investments, which also include London-headquartered clean energy asset manager Sustainable Development Capital.

In a June Capital Allocators Podcast interview, Citron explained that Volery started with a focus on investments before quickly realizing that connecting impact-oriented GPs with mainstream LPs through investments in asset managers would serve as a “force multiplier” for the market.

Volery mapped 1,200 impact managers across asset classes and geographies along 27 criteria into green, yellow and red categories of suitability, Citron explained. Among sectors, he said, the firm’s search started with a bias toward broad categories where the effort of education could be rewarded through multiple approaches to investment.

“Sustainable agriculture was our first sub-category of interest and remains a category where we hope to do more,” he said. “Water is an area of interest for us.”

Volery’s Fall 2018 investment into RRG was its first and came after an introduction from a pair of family office LPs that had previously invested with the Los Angeles-headquartered firm and were considering anchoring a proposed debut co-mingled fund, Citron explained.

At that point, RRG had already invested $1 billion raised on a deal-by-deal basis over its 15-year history, realizing a little over a third of capital deployed and achieving high-teens net returns with zero realized losses, he added.

After completing its investment into both RRG’s management company and its future funds in late 2018, Citron said, Volery helped RRG prepare for the fundraise on the Sustainable Water Impact Fund.

The vehicle surpassed its $750 million target to close on just above $900 million in mid-2020. Its strategy focuses on asset and land investments in California, Chile and Australia that improve surface and groundwater management.

Citron said much of Volery’s work focused on helping communicate the differentiated nature of the RRG’s specialized focus.

“A lot of managers are really good investors but aren’t necessarily as practiced in telling their stories and helping connect what they do and why its meaningful to LPs and other constituents, so we focus there,” he said.

“They [RRG] are real experts in what they do and in particular in water; the acquisition, storage, conveyance and application of water, a lot of which they express through agriculture assets and some of which they express through water-specific assets.”

Ares announced its minority investment into Volery in a May 2019 statement that placed its strategic partnership with the firm in the context of a growing focus on “ESG or responsible” investing at the Los Angeles-headquartered firm, which manages approximately $197 billion.

In the podcast interview, Citron explained that in addition to its asset-manager focused partnership with Ares, Volery also manages a workforce development focused partnership with Denver-headquartered Zoma Capital.

Ares and RRG declined to comment.