Tag Archives: Private equity

Sustainability — the missing the component!

I recently attended a Sovereign Wealth Conference hosted by KL Gates (law firm) and co-sponsored by The Fletcher School (Tufts University) in Washington, D.C. on October 10th, 2013.  The gathering was rather highly attended given an 8am start time and heavy rain that morning.  The main topic was actually the global infrastructure demand needs and the competition for capital.

Basically, the gathering attendees were the usual mix of capital providers, service providers and academia.  In addition, there were also several government related agencies/strategic bodies in attendance.

Global infrastructure projects want to attract sovereign capital investment.  A missing component to the discussion was the topic of “sustainability” as defined both in economic returns as well as impact returns.  There was one presentation that discussed the need for sustainable private equity investment, (SPE Capital Management), however, sustainability and impact was not woven into the fabric of the overall discussion that day. The focus was mainly infrastructure capital needs on a stand-alone basis.

According to sources published by THE WORLD BANK, global infrastructure capital demand needs total $60-70 Trillion with “T” of capital required for global projects.  As a result, the question becomes “Who can possibly fund this amount of capital?”  In 2012 global GDP was only $71 Trillion.  Therefore, allocation of capital and the sources and uses of capital is critical.              http://databank.worldbank.org/data/download/GDP.pdf.

In many developing nations, the need for basic infrastructure comes with high risks.  Risks take the form of time and return.  Generally, these infrastructure projects require as much as 30 to 40 years to build out and to repay investors, e.g., toll roads, bridges, tunnels, hospitals.

Therefore, “How do capital managers and capital providers satisfy this capital requirement?”

GCH Partners has analyzed this economic deficiency, and has answered it with the keyword “sustainability” as defined as “impact investment opportunities.”   Substantial investment capital is attracted by market based returns — while positively contributing to the community, the region, the nation, and the economy at large is the added benefit.

However, it is important here to take into consideration that there is a way of integrating the for-profit skill-sets while keeping the integrity and the mission of the not-for-profit business model in tact.  Sustainability offers a solution.

While keeping social consciousness in mind, we share the opportunity for institutional capital to participate in bettering the world and creating market based investment returns — a win-win situation for all parties.

In conclusion, idea generation, creativity, social consciousness and an ability to invest in projects that will make the world a better place and again, generate market based returns.  This is a solution and an answer to the overall economic GDP growth concerns and the health of the world.

 
Gregory Mark Hill
Washington, D.C.
October 10, 2013

New York hosts another Impact Conference thanks to Credit Suisse!

On June 27, 2013, I returned back to my alma mater, Credit Suisse, who hosted an impact conference at their headquarters on Park Avenue.  The definition of impact can easily get you 100 different answers from 100 different people — especially the responses that come from the for-profit vs. the not-for-profit sectors.   A simple definition of impact investment is to create returns beyond financial.  The time is now to get involved and get educated.

The main presenter at this event was a group called the All World Network (http://www.allworldlive.com).  They track the 500 top performers in emerging regions such as Africa, Arabia, EurAsia and Asia.  Two founding women partners spoke about their mission to create awareness of the top 500 in those regions of the world.  Their collective past experience includes analyzing fast growing companies in the US.  This led to the development of the magazine called the INC. 500, now the INC. 5000.

That evening, the founders shared with us how in 1985 a small fast growing software company was discovered — called Microsoft.  At the time, Microsoft was ranked #163 in that magazine.  These founders want to replicate the “Microsoft discovery” possibility many times over in those emerging markets.

Entrepreneurs were invited to this conference from those regions.  They are developing businesses for their local markets and seek American capital for investment.  I had a chance to listen to about 10 portfolio companies led by “social and for-profit oriented” entrepreneurs.  Some  of the business plans ranged from a Middle Eastern woman’s social networking site to Pakistani woman’s publishing entity to former doctors having founded a medical instruments business.  The entrepreneurs that night were seeking capital from $500,000 to $100 million.

In New York, we operate in the world of money and capital markets. New York is the “headquarters” for global capital an offers a bridge to those hungry for capital. The entrepreneurs were exposed to capital investors here in New York that evening.  As more entrepreneurs come from abroad (particularly social entrepreneurs that come to the US) — there will be an increasing need of assistance to help these entrepreneurs refine what is often called an “Elevator Pitch!”  This presents advisory opportunities for Credit Suisse and for boutique firms as well.  (I will speak more about “The Elevator Pitch” in my next article.)  But simply, an elevator pitch means — can you explain the value of your company and also be interesting to an investor during the length of an elevator ride?  

In short, these types of conferences hosted by Credit Suisse are critical to getting the word out to a growing audience of interested parties. This should attract an audience to include wealth managers, funds, intermediaries, philanthropic organizations, and entrepreneurs, but also should reach out to include schools and the student community, i.e., the important up and coming young consumer generation.  

My message to the global impact community and to the large pools of capital is to attend as many of these conferences as possible. This is a format to learn how to start and have quality conversations on how to work together with businesses thinking about impact, and how to create best practices in the process. These are not easy conversations – as the terminology used by capital providers to financial service advisers and to those in the impact and the foundation world are very different.

More than 12 years ago, I started connecting  these various groups with each other.  I realized immediately that there was a need to assist philanthropic organizations, asset managers, banks, legal firms, accounting companies, and endowment plans on how to speak with each other.  I found that I had literally become a bridge to connect the disconnects in communication among these groups (even though we were all speaking English) as there was lots of industry jargon used by both sides.  For example, I remember one meeting hosted at a prestigious law firm with its lawyers and a philanthropic group in attendance. I was able to quickly turn “a long story” of an agriculture project with workers and staff in desperate need of money in a developing country into “IPO speak.”  I turned the project into the Firm’s prospective client, and made easy references to underwriters, syndicate groups, and access to global capital and world trade flows. This sparked ideas and excited conversation that led to one of the partners remembering a network of relationships in neighboring region useful to that developing country.  My background having worked on Wall street, principally at Credit Suisse and Deutsche Bank, combined with having built a 501(c)3 not-for-profit in Silicon Valley proved to be KEY to being a useful “translator” for those two different groups at that meeting.      

The experience of working both in the arena of money and the fields of charity (in parallel) has become highly relevant today and is very important, going  forward.  After all, it will be at conferences like this one, hosted by strong global brands like Credit Suisse (www.credit-suisse.com) that will help attract a curious, fast-growing and diverse audience looking to learn more and to become a part of both these worlds — capital and impact, profit and not-for-profit.

Let’s keep the returns beyond financial conversation rolling forward.

Gregory Mark Hill
New York City

New York leads the way for Impact Investment

New York is leading the way in yet another important stance to combine educating, informing, and making money though IMPACT.

There clearly is a growing consciousness about making the world a better place, we see this daily, the themes are catchy and are everywhere you turn now — the key to all of this is creating the awareness that this is “new area of IMPACT investment” is NOT all simply charity work with no returns or low returns.  There are attractive market based returns to be made.

As I left the building where I was working out at recently — I saw a pamphlet “NYC Preview Guide” where the New York City Javits Center hosted the Green Festival 2013 on April 20-21.   http://www.greenfestivals.org

Perhaps it’s just celebrating Earth Day – Week!?!

However, when you see Corporate Giants like Network Station ABC (owned by The Walt Dysney Company) and FORD Motors and its “Impact Effort” through its Ford Community Green Grant partnering with this  Green Festival — we begin to understand that there is investment and capital being deployed that will lead to create returns, in many forms, such as ROI (Return on Investment) in addition to education, idea generation, and social responsibility, more.

Over the next decade, and starting this year already, you will see and hear about the evolution of many new Private Equity and Asset Management firms — and how they will shift their investment strategies into this emerging area of importance and return significance.

The combination of Business Leaders, Investment Managers, NGOs, and governmental bodies will continue to work together to create more possibilities for our families and future generations.

More soonest.

Gregory Mark Hill

May 7, 2013