Emerging market investment boutique Arisaig Partners has launched a public markets impact fund, with the strategy understood to include seed money from a Scandinavian pension fund.
Arisaig’s fund will feature a concentrated portfolio of around 25 companies, from an investment universe of about 150.
They are selected based on an analysis of a company’s investment case – expected financial returns over a 20-year horizon – and impact case, which uses the Impact Management Project’s five dimensions of impact framework, as well as a governance checklist and environmental and sustainability risk assessments.
In addition, companies are scored on three impact dimensions – reach, criticality and effectiveness.
David Lanning, who is leading the ‘Next Generation’ fund, said it “brings the pioneering impact work undertaken by private equity investors to public emerging markets, where we believe there is much more scope for impact”.
Asked to expand on how Arisaig makes a difference to investee companies’ impact, Lanning said: “As patient, constructive, long-term minded investors, we believe we can provide positive impact businesses with an important base of semi-permanent capital from which to expand revenues and impact at a sustainable pace for many years to come, freed from the arbitrary timescales and exit requirements which often accompany private investors.
“Our selective approach and low portfolio turnover allows us to develop in-depth knowledge of target companies,” he added. ”The longevity of our relationships with them and the experience and networks we have developed from 24 years operating in emerging markets give us the opportunity to make a meaningful contribution to improving and growing impact via collaborative engagement.”
“Investors who increasingly seek to maximise positive impact alongside financial returns should prioritise emerging and frontier markets”
Rebecca Lewis, Arisaig’s managing partner
Lanning will be supported by Lillian Wang, a former impact consultant who joined Arisaig this year and will be the fund’s impact assessment and engagement director.
Rebecca Lewis, Arisaig’s managing partner, referred to “nudging” the investor’s holdings towards the most sustainable trajectory for maximising long-term financial returns.
“Investors who increasingly seek to maximise positive impact alongside financial returns should prioritise emerging and frontier markets, where population sizes and scope for impact are greater,” she said.
Earlier this week IPE reported that Somerset Capital had launched an emerging markets fossil fuel-free fund, driven by Swedish buffer fund AP1.