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India a priority for $2 billion The Rise Fund

LiveMint logoLiveMint 04-10-2017 Shrija Agrawal

Mumbai: The Rise Fund, founded by TPG Growth founder and managing partner Bill McGlashan, U2 lead singer and activist Bono, and Jeff Skoll, an entrepreneur and film producer, has closed the largest impact investment fund raised so far with a total corpus of $2 billion.

Managed by TPG Growth, The Rise Fund is a global fund committed to achieving measurable, positive social and environmental outcomes alongside competitive financial returns, which is what impact investing is all about. TPG Growth manages more than $8.3 billion of assets.

“We have raised $2 billion of capital and this is the largest private investment impact fund ever raised. It has been raised from some of the most important financial institutions in the world, a majority of which have never invested in impact before,” said McGlashan, in a telephone interview with Mint.

The Rise Fund invests in education, energy, food and agriculture, financial services, growth infrastructure, healthcare and technology companies. India is a priority investment destination for The Rise Fund.

Already, out of a total of five investments made by the fund, two are in India. In May, the fund invested $50 million in Hyderabad-based Dodla Dairy, its first investment in India. The fund has also partnered with impact investor Elevar Equity and will work closely with the latter’s team in India.

“India is our priority; 400 million of the world’s unbanked people live in India. In healthcare, 65% of the population does not have access to sanitation; India has 65 million diabetics; farmers in India grow 46% less rice per acre than their counterparts in China; literacy lags by 20% and teacher absenteeism rate can be as high as 40%. Meanwhile, you have some of the most extraordinary talent in the world; 70% of the population now has access to mobile connection and smartphone adoption will increase 400% over the next five years,” said McGlashan, listing all the things that made India attractive for The Rise Fund.

While many of the existing limited partners (LPs) of TPG Growth participated in The Rise Fund, the new fund also saw several new LPs, he added. Investors in private equity funds are called limited partners.

LPs who participated in the fund include Sweden’s pension fund AP2, University of California and several ultra high net-worth clients of UBS Group AG.

Historically, the managers of commercial capital have avoided investing in impact funds due to a perception that this involves compromising on returns, said McGlashan.

“Investors with a fiduciary responsibility ultimately need to prioritize financial returns. So the key here was that all of these institutions understood that our priority was financial returns and collinear impact returns. These are dual priorities and there is no conflict between them. The success of the businesses we are funding is ultimately the key to delivering impact and obviously the key to delivering returns,” he said.

According to McGlashan, the investors were also attracted to invest in the fund because of the rigorous impact measurement metrics developed by TPG.

“We then brought in KPMG as our partner, who are now providing the assurance around the impact,” said McGlashan.

In a recent report on the state of impact investment in the country, McKinsey & Co. said impact investing in India has the potential to grow from $1 billion in 2015 to $6-8 billion by 2025.

Realizing the difference in the mindset required for commercial private equity investments and impact investments, TPG Growth has built a new team for The Rise Fund.

“It was important that we bring on a new team to focus on the impact priorities, so Rise has (a) dedicated team. We do not want to distract our investing team from doing what they do well and that is investing and we want them to focus on financial returns,” said McGlashan.

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