In Uganda, a joint venture between dairy producer Tomosi’s Farm Bwesharire Ltd., and the $350 million private equity fund, Vital Capital Fund, led to the setting up of a dairy processing plant which transformed the region. Established as Vital Tomosi’s…
In Uganda, a joint venture between dairy producer Tomosi’s Farm Bwesharire Ltd., and the $350 million private equity fund, Vital Capital Fund, led to the setting up of a dairy processing plant which transformed the region. Established as Vital Tomosi’s Dairy in 2014, the plant at present processes over 50,000 litres of milk a day, and markets products such as yoghurt and UHT milk across Uganda and Rwanda. The project created jobs, reduced food waste, and directly linked production to market in the largest milk-producing area in Uganda.
No longer considered niche, impact investing is finding more and more takers – from family offices to private equity. Not only is it seen as a significant driver of socioeconomic progress, but is also attractive in terms of return. For family offices, impact investing often aligns with family values, and goes above and beyond financial considerations. A 2015 report on sustainable investment strategy by Morgan Stanley found that investing in sustainability either meets, or exceeds, the performance of comparable traditional investments.
Funds that work within the triple bottom line framework are not new, nor is the idea of impact investing. Over the years, other established firms such as Blue Orchard and Triodos Bank have been injecting capital into sustainable projects and businesses, contributing to regional economies and the environment.
However, in recent years, mainstream private capital has been gravitating towards impact investing. Some of the largest global private equity firms have set up dedicated funds that are focused on social impact. TPG Growth, the growth equity and middle-market buyout arm of TPG Capital, has been fundraising towards its $2 billion investment vehicle, Rise. The Rise Fund is focused on creating social impact through its investments, and is measuring returns in terms of positive outcomes, through independent research.
French private equity firm Ardian, which has about $60 billion of assets under management, has also considered raising a dedicated social impact fund this year. Ardian is one of several private equity firms to have recently considered raising a dedicated social impact fund. Goldman Sachs and Bain Capital have also raised social impact funds, accurately recognizing investors’ inclination towards such vehicles.
Market Watch recently reported that the global impact investing market is expected to grow to an estimated $307 billion by 2020, at a CAGR of 17.86 percent. Demand for purpose driven finance and an ecosystem of growing support could very well make impact investing the norm in the years to come.
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