“Ten to 15 years ago, I’m not sure people knew how to spell ESG,” said Zia Uddin, president of Monroe Capital, in an interview with Mergers & Acquisitions. “We’re in the first inning of ESG, and it will be a dominant theme for the next two decades.”
“Institutional investors vote with their wallets, and this is something that was demanded by the LPs,” said Uddin. “If it wasn’t for the LPs, I’m not sure the industry would move there. This should have been done a long time ago. It’s the same thing with diversity and inclusion in the recent decade. It should have been talked about 40 years ago. Now the LPs are asking, not about your returns – returns are great – but, ‘tell me what you’re doing.’”
When asked why LPs are pushing diversity, equity and inclusion and environmental, social and governance issues now, Uddin said: “It’s all about the underlying investor, the U.S. pension funds who they’re representing. It’s an important part of the discussion and a reflection of the values of who they are supposed to represent with their dollars.”
Uddin was promoted earlier in October to president of Monroe. His previous position was partner and portfolio manager, institutional portfolios. He continues to report to Ted Koenig, who remains chairman and CEO of the Chicago-based lender.
Direct lending, especially ESG-focused investing and technology/software investing are among several areas Uddin said Monroe is bullish on, with others being: specialty finance, highly structured real estate, infrastructure lending and asset-based lending.
Next month, Mergers & Acquisitions will honor LPs and GPs in our new list, PE Innovators in ESG. Join us on Dec. 1 for our virtual event, where we’ll hear from those leading the way on ESG.
—Mary Kathleen Flynn