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UBS launches first fund for Impact Investing
UBS has set up and closed an Impact Investing Private Equity fund for SMEs in emerging and frontier markets – the first bank in the industry to do so. With a volume slightly in excess of CHF 50m, it is one of the largest impact funds in the sector funded by clients and private capital. The fund represents a unique investment opportunity and will generate significant social and environmental impact.
Zurich/Basel, 23 September 2013 – UBS has set up and closed its first impact investing fund dedicated to investing in small and medium-sized enterprises (SMEs) in emerging and frontier markets (countries with nominal GDP of less than USD 10,000 per capita). The Impact Investing SME Focus Fund is a fund of funds, managed by OBVIAM, an independent investment advisor specialized in long-term investments in emerging and frontier markets. The fund will take equity stakes in privately held SMEs through the underlying funds. Investments will be made in sectors and businesses that drive social or environmental change. These include healthcare, education, access to finance, basic infrastructure and agricultural/sustainable forestry. "Obviam is very excited about this partnership with UBS. We have been an active investor in the impact investing space for over 14 years for the Swiss Confederation. With this product, we open up these investment opportunities to private investors", said Claude Barras, CEO of Obviam in Bern.
SMEs constitute the backbone of most economies. In developing countries they employ more than 75% of the workforce, yet very few have access or sufficient access to finance. Microfinance banks serve micro entrepreneurs in these countries, whereas regular private equity firms and commercial banks target a few large companies like utilities or mining companies, leaving the SMEs neglected.
The SMEs in which the fund invests commit themselves contractually to improve the lives of people in a direct and measurable way. Social considerations are therefore an integral part of the investment policy, and the social impact of the investments is monitored and measured independently by Global Impact Investing Reporting Systems (GIIRS) and Deloitte. Investors will receive an annual social impact report.
The fund has already made its first investment in an education fund in India. This investment will help the emerging middle class gain access to high-quality but low-cost education and other ancillary educational services like IT.
The launch of the Impact Investing SME Focus Fund is part of UBS's wider commitment to leverage its position as the world's largest wealth manager and mobilize private capital for positive impact.
Jürg Zeltner, CEO UBS Wealth Management, says: "The Impact Investing SME Focus Fund offers clients a unique investment opportunity in emerging and frontier markets that will generate significant social and environmental impact while yielding a financial return for investors. We, just as much as our clients, know that the way we invest significantly impacts the biggest global challenges for the better. We are incorporating this philosophy in our investment advice as we continue to deliver on our Client Promise to provide superior investment advice and solutions for our clients' wealth."
The Impact Investing SME Focus Fund also offers investors a uniquely flexible structure. In addition to the initial investment in the fund, investors have the opportunity to co-invest alongside UBS and make additional direct impact investments outside of the fund. Investors new to impact investing can also take part in the due diligence process of a new investment in order to learn how to make investment decisions.
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