August 18, 2017

Union Bank of Switzerland (UBS) Wealth Management announced it has raised US$325 million from its high net-worth investors for investment into social impact private equity fund, The Rise Fund. The investment marks the largest commitment to the investment fund to date.

Launched in 2007, The US$2 billion Rise Fund, which included Irish rock star Bono as one of its founders, was formed as a global growth equity and middle market buyout platform for alternative asset management firm, TPG, and is managed by Bill McGlashan, founder and managing partner of TPG Growth – the growth capital fund of TPG.

The fund’s goal is to realize social and environmental impact and drive measurable positive change, while still gaining competitive returns for its investors. The vehicle focuses on seven sectors: agriculture and food; education; energy; financial services; healthcare; technology; and infrastructure, and impact is measured through science-backed quantifiable assessment.

In May of this year, The Rise Fund made its first investment in the food and ag space, and also its first investment in the country of India, investing $50 million in Hyderabad-based Dodla Dairy.

Founded in Hyderabad in 1995 by D. Sesha Reddy and D. Sunil Reddy, Dodla is a producer of fresh dairy products. In addition to its core product – fresh packaged liquid milk – the company also offers curd, butter, and ghee; selling 900,000 liters of milk and six tons of dairy products per day, according to the company website.

Due to the perishable nature of dairy products combined with India’s climate and challenges with infrastructure along the supply chain, Dodla sources its raw milk from more than 250,000 smallholder farmers across 7,000 villages every year. It is through this business structure that The Rise Fund sees a window to effect social change.

Mobilizing Private Wealth

Impact and sustainable investing is seeing greater standing in the investment world. Assets tied into sustainable and impact investment strategies totaled $23 trillion in 2016 – a 25 percent increase over such assets in 2014, according to The Global Sustainable Investment Alliance. Today, socially responsible investments account for 26 percent of all professionally managed investments worldwide.

Meanwhile, Credit Suisse issued a report in October 2015 that concluded that the richest 1 percent of the world’s population held more wealth that the rest of the global population – pushing global inequality to a new all-time high.

In the face of these shifts, impact and sustainable investing is seeing greater standing in the investment world.

“The interest in impact investing and these kind of opportunities among the clients we speak to actually far exceeds the supply of the available opportunities,” Simon Smiles, chief investment officer for ultra high net worth individuals with UBS Wealth Management, told Reuters.  

At the World Economic Forum (WEF) meeting held toward the beginning of this year, UBS pledged to invest $1 billion per year over the course of five years, or totaling about 3 percent of its total capital under management into social and environmental impact strategies. In a white paper written BY UBS for the WEF, private capital will be a critical component in meeting the UN’s Sustainable Development Goals (SDGs) of eliminating hunger, raising the quality of education, improving health and well-being, driving innovation, improvement infrastructure, and taking action against climate change.

To help head up the bank’s sustainability initiatives, UBS Wealth Management Americas named Stephen Freedman as head of the firm’s Sustainable Investing Solutions effort in the spring of this year.

“Sustainability is a cornerstone of our business, and I look forward to … scaling up sustainable investing offerings across all asset classes and product areas,” said Freedman at the time.

The Rise Fund will use the capital committed by UBS to invest in growing companies located across both developed and developing countries, and will measure the quantifiable benefits that each investment generates from sourcing to exit.

“The investments considered span multiple industries across the globe,” Jason Chandler, head of investment platforms and solutions at UBS Wealth Management Americas, told Business Insider. ”An independent firm assesses the positive impact which is reported to UBS clients in addition to the financial return on their investment.”

UBS’ investment in The Rise Fund comes one year after the bank raised US$471 million for its UBS Oncology Impact Fund last year, and it will not be the last sustainable investment move made by the bank.

Christian Weisendanger, global head of investment platforms and solutions in wealth management with UBS, told Reuters, “This Rise Fund is one of many to come.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.