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Impact Investing

Apollo’s impact arm makes 1st affordable housing bet

Apollo Global Management’s acquisition of United Living Group underscores impact opportunities in affordable housing.

Apollo Global Management is targeting affordable housing with its latest impact investment.

On Tuesday, the private equity giant said its impact fund will acquire United Living Group, a UK-based provider of infrastructure, maintenance and construction services in the affordable housing sector. Terms of the deal were not disclosed.

The acquisition is the fifth under the $947 million Apollo Impact Mission fund, which targets later-stage companies and prioritizes measurable social and environmental impacts. The deal is also the impact team’s first foray into affordable housing.

Affordable housing, particularly in multifamily residential housing, is a significant opportunity for impact investors, according to a PitchBook analyst note on ESG in private market real estate. These projects often create overlapping opportunities in the form of green buildings and economic development.

“In recent years, we have seen more of the largest real estate funds raised each quarter investing in areas like affordable housing, workforce housing and opportunity zones. Especially as housing costs continued to climb with inflation, the growing gap between supply and demand in these areas was apparent,” said Anikka Villegas, a PitchBook fund strategies and sustainable investing analyst.

“Apollo’s acquisition of United Living Group not only has the potential to yield positive social impact ‘returns,’ but also to capitalize on this broader trend in real estate,” she added.

The acquisition is another example of asset managers responding to LP demands for social and environmental impact in their investments. In a 2023 Nuveen survey of 800 global institutional investors, three-quarters of respondents said they were either considering or planning to consider the social and environmental impacts of their investments. Of this group, 61% agreed that impact investments will be an increasingly important allocation for them in the coming years.

Impact investing has grown in tandem with this demand: In recent years, some of the world’s largest PE firms, including TPG and KKR, have closed funds on more than $1 billion each. At the end of 2021, the market stood at more than $1 trillion, according to the Global Impact Investing Network.

Through its impact strategy, Apollo ties a portion of its carried interest and management’s equity compensation to the performance of its initial impact objectives. The firm developed the framework in alignment with the United Nations Sustainable Development Goals.

The acquisition is expected to be completed over the summer.

Featured image by 1599686sv/Shutterstock

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