Family offices and philanthropists will play an increasingly crucial role in shaping the growth of impact investing in Asia, said ABC Impact’s chief impact officer, Sugandhi Matta.
In the last 1-2 decades, Asia has enjoyed a period of unprecedented economic growth. This has led to the rise of many wealthy family offices and philanthropists, many of whom are well-positioned to invest strategically in areas which are underserved or overlooked by foreign investors.
In addition, Asia has also historically lagged behind the US and Europe in terms of data representation and research coverage. Over time, this has led to a dearth of PE impact investment activity in Asia even though the social and environmental needs in the region could be arguably one of the highest globally.
Asian family offices and philanthropists are in a key position to fill this knowledge and expertise gap in ways that many foreign investors are unable to, Matta explained.
“Family office (wealth) is a very interesting resource. It is patient. It is mission aligned. It is long term and they’re clear about what they want…I think they’ll play a more dominant role,” said Matta in an interview with DealStreetAsia.
ABC Impact currently manages a $300-million PE fund backed by Temasek Trust, Temasek Holdings, Pavilion Capital, Mapletree Investments, Seatown Holdings, and Sembcorp Industries. Some of its portfolio companies are Innovafeed, Iceotope and Cropin.
As an early pioneer of institutional impact investing in Asia, the Singapore-based fund has painstakingly developed a rigorous framework and score system for its investing processes. Most of its underwriting approaches and case studies are open-source, with the hope that Asian investors will continue to share, converse, and collaborate on impact investing in the region.
“The demand and needs in Asia are vast. The solutions needed are unique, and not all Western solutions can be plug-and-play in this region. So from a demand perspective, we are more enthused. We think more capital can go into a lot more companies that are really genuinely trying to make a difference, and the funding gap is so big that [even if] more capital comes in, you’re not going to be anywhere close to scratching the surface,” said Matta.
Edited excerpts of an interview with Sugandhi Matta, Chief Impact Officer, ABC Impact: