Impact Investing in Asia: Poised to Grow
Impact investments are expected to increase globally this year, with South Asia and Southeast Asia among the top target regions, according to a recent survey by JPMorgan and Global Impact Investing Network (GIIN). This could bode well, in particular, for India’s nascent impact investment sector, which is one of the most active in the region. It has been estimated that US$1.6 billion of capital has been invested in more than 220 impact enterprises across India, with more than half of the investments in microfinance. In addition, impact equity investments in India are estimated to grow 30% this year. Along with microfinance, enterprises in agriculture, health services, clean energy, and education are attracting investments. Narayan Ramachandran, CFA, Unitus Capital’s co-chairman, has said, “the biggest challenge is the market/business plan challenge, which is, if you invest in something, can it grow big enough and profitable enough for you to have a range of exit options?” He noted that while there have been successful exits recently in financial services enterprises, there isn’t a long list of companies in India “that have been sold in subsequent rounds to different and new kinds of investors.” Operating impact businesses in areas such as agriculture, health services, and other sectors “have really only been invested in over the last five to six years.” The support of impact investing around the world needs to come to small businesses in such a manner that they are helped, facilitated, and nurtured to grow into bigger mainstream businesses rather than a large impact business, which mainstream investors are not interested in. Click here to read more.