Hedge fund veteran launches impact firm with former Jana, BlackRock executives

By Svea Herbst-Bayliss

BOSTON (Reuters) - Hedge fund industry veteran Chris James, who co-founded technology oriented Andor Capital nearly two decades ago, is launching a new firm that will focus on impact investing at a time these types of portfolios are delivering strong returns.

San Francisco-based Engine No. 1, named with a nod to one of the city's oldest firehouses, will invest in companies that make money while also investing in jobs, workers, communities and the environment, the firm said in a statement on Tuesday.

The firm will launch with $250 million in capital and expects to raise more from institutional and retail investors later, a person familiar with its plans said.

Impact investing, which traditionally focuses on environmental, social and governance issues, has become hugely popular as investors worry about racial and income inequality and want their cash to not only deliver a return but be a force for good.

Investors poured $20.9 billion into sustainable funds during the first half of 2020, almost as much as they added during all of 2019, data from Morningstar show. Last year these types of funds performed better than conventional funds, partly because they were underweight energy companies, Morningstar data show.

"Companies that invest in their stakeholders are better, stronger companies as a result," James, who also founded Partner Fund Management, said in a statement.

Charles Penner, who most recently led activist hedge fund Jana Partners' effort to push companies to become better corporate citizens, and Jennifer Grancio, a founder of BlackRock's iShares business, are founding team members.

Ed Sun and David Swift, who worked with James at his previous hedge funds, Michael O'Leary, who helped found Bain Capital Double Impact, and Madeline Hawes, who advised on early-stage technologies at Google X and Earnin, are also joining the new firm.

(Reporting by Svea Herbst-Bayliss; Editing by Chizu Nomiyama)