Over the last decade, both impact investing and environmental, social, and governance (ESG) investing have become buzzwords—and topics of interest for investors who are interested in making a difference, not just realizing a particular rate of returns. And the effects of impact investing are even more outsized in emerging markets, where a relatively small investment can go a long way.
Perhaps no industry has been more shaped by impact investing than the healthcare industry. From improving access to innovating in the life science and biotechnology fields, impact investments will continue to have a profound economic and social impact while providing investors with a significant upside. What should equity investors know before they begin? Below, Alta Semper CEO Afsane Jetha breaks down what investors should know about impact investing in the healthcare industry.
Effects of Impact Investment Generally
Recently, the Global Impact Investing Network (GIIN) conducted a survey of 300 of the world’s leading impact investors. This survey revealed that despite the impressive evolution of impact investing over the last decade, steady growth is likely to continue in the future. Survey respondents also indicated that many impact investors can accept risk-adjusted returns so long as the investment aligns with their overall mission and helps the investors achieve the stated goals of their investment.
“Many investors assume that making a difference means giving up high returns,” Jetha explains. “But this couldn’t be further from the truth. Instead, it’s possible to have a long-term impact on a region or industry while also enjoying market-rate returns.”
Investors can choose from one of several approaches to impact investing: (1) focus on achieving certain returns; (2) focus on achieving certain impact outcomes; and (3) a combined focus that requires a certain rate of return and certain impact outcomes. There’s no one-size-fits-all approach, however; the right choice will depend on the investor’s short-term and long-term financial interests, impact goals, timeline, and expectations.
Impact Investing in the Healthcare Industry
Healthcare impact investing can help accelerate innovation and generate real, lasting changes in the industry—often far more changes than government funding and corporate investments can manage. The difference is that private equity is often disruptive, bringing innovation to the industry that forces existing companies to either adapt and pivot or fall by the wayside.
Many impact investments involve startups or large institutional investors—and while these two categories may seem diametrically opposed, they each fulfill crucial roles. Startups are flexible, often well-funded, and have the freedom to try new technologies that may or may not work out. Large institutional investors often demand a certain rate of return that forces companies to prioritize their technologies and focus on clear winners.
Just a few of the healthcare categories in which impact investing is already making a difference include:
Expanding Global Access to Care
The COVID-19 pandemic highlighted the interconnectedness of healthcare challenges globally. No country is an island, and the rapid spread of COVID-19 proved this. Without the cooperation of researchers in the U.S., Europe, China, and Africa, it would have taken far longer to develop effective vaccines that reduced COVID’s lethality rate. Countries were distributing vaccines not only within their own borders but across the globe—and subsidizing the costs of these vaccines expanded their availability to emerging markets and countries without reinforced healthcare infrastructure.
Strengthening Mental Health Care
Another consequence of the COVID-19 pandemic was its significant impact on mental health. Anxiety and depression rates increased by 25 percent globally during 2020, and many communities were already underserved when it came to accessing to high-quality mental health care. Telehealth and other high-tech options have expanded as a result of the pandemic, bringing mental health care to a broader array of people.
Supporting Those Age 65 and Older
The World Bank estimates that between 2020 and 2030, the number of people aged 65 and older will increase by more than a third. Impact investors who focus on this category are looking into alternatives to nursing facilities that can help seniors age at home, specifically targeting historically marginalized communities in emerging markets.
As you can see, each of these areas offers tremendous potential markets—and the opportunity for tremendous returns while making a difference.
About Alta Semper Capital:
Alta Semper approaches asset management with a unique and out-of-the-box focus. Its close-knit team maintains over 70 years of combined specialty experience, boasting prolific resumes with leading investment firms and private equity groups. Alta Semper is known for its knowledgeable shareholder base, supplying strategic operating partners who manage each transaction. The group’s best-in-class management works throughout Africa, supporting twelve primary economies with substantial, highly diversified economies.
At Alta Semper, we take a sector-based approach to private equity. We don’t believe Africa is an asset class, but a series of sovereign countries with their history and competitive advantages. Our investments are focused on consumer and healthcare sectors in stable, well-diversified countries, and provide a solid return to investors while allowing them to do good.
If you’re interested in more information on these investments, visit our website today.