Singapore-based UOB Venture Management (UOBVM) today (September 9) issued its disclosure statement on the Operating Principles for Impact Management, the first in Southeast Asia to do so.
The Impact Principles were launched at the World Bank Group/International Monetary Fund Spring Meetings in April 2019. The initiative, led by the International Finance Corporation in consultation with leading impact asset managers and asset owners, aims to promote greater transparency, credibility and discipline in the impact investing market. The Principles provide a common framework and clear market standards on impact investing and focus on ensuring that impact considerations are purposefully integrated into key stages of the investment process.
Globally, there are more than 100 signatories to the Impact Principles, with UOBVM being the first and so far only financial institution in Singapore to have signed up to them.
In its inaugural disclosure statement, UOBVM demonstrates how, through its impact investing strategy and approach, in particular for its Asia Impact Investment Fund (AIIF), it upholds the nine Impact Principles. The company says it:
- Defines its strategic impact objective(s), consistent with its investment strategy.
- Manages its strategic impact on a portfolio basis.
- Establishes and documents its contribution to the achievement of impact.
- Assesses the expected impact of each investment, based on a systematic approach.
- Assesses, addresses, monitors and manages potential negative impacts of each investment.
- Monitors the progress of each investment in achieving impact against expectations and responds appropriately.
- Conducts exits considering the effect on sustained impact.
- Reviews, documents and improves decisions and processes based on the achievement of impact and lessons learned.
- Publicly discloses alignment with the Impact Principles and provides regular independent verification of the alignment.
Launched in 2015, AIIF is a double bottom-line fund that aims to achieve both impact and financial returns to institutional and accredited investors globally. The fund invests in high-growth companies from the education, healthcare and agriculture sectors in Southeast Asia and China. It also focuses on investments that will help to improve financial inclusion, affordable housing, sanitation, clean energy and water for the region’s low-income communities, also known as the “base of the pyramid”.
Ernst & Young provided independent verification of the AIIF’s alignment with the Impact Principles, and evaluated OBVM’s investment approach, policies, processes and the tools used in assessing and tracking the impact of the AIIF’s portfolio. Credit Suisse Singapore acts as the impact adviser of the fund and provides objective assessments of the impact of the fund’s investments.
The second AIIF is now open for subscriptions. It has a target fund size range of US$100 million and is expected to make equity investments of about US$1 million to US$15 million each.
UOBVM chief executive officer Seah Kian Wee says the need for impact investments is even more pressing now with the Covid-19 pandemic disproportionately impacting low-income communities in Asia and pushing more people below the poverty line.
“We believe the demand for impact investments will continue to grow and are also reassured that our AIIF portfolio has stayed resilient in the face of the pandemic. A number of our investee companies are achieving higher growth, especially those providing technology-enabled solutions to improve the accessibility of online healthcare and education services for the poor. This exemplifies that impact investments through private equity can help to advance social development and also to achieve quality financial outcomes,” he notes.