Impact Investing Bar Set High by Oasis Fund
Interview with Jean-Philippe de Schrevel, Bamboo Capital Partners
The Oasis Fund, managed by Bamboo Capital Partners, was named a “Best for the World Fund” by B the Change Media, for setting the measurement and management bar in impact investing, based on its GIIRS Rating. “Best for the World Funds” include investment funds that have completed the rigorous GIIRS Rating, a third-party verification of the fund’s investment impact administered by the independent nonprofit B Lab. Bamboo Capital Partners is a private equity firm specializing in investing in essential services sectors in emerging economies. By using a market-oriented approach to fill gaps where government and philanthropy may not be equipped to serve effectively, they deliver social and environmental gains to their investors, while achieving above market returns.
I spoke with Jean-Philippe de Schrevel, Founder and Managing Partner of Bamboo Capital Partners, about Bamboo’s history as an impact investor, impact measurement, investment strategy, and impact investing opportunities—Jason Howell
3BL: Can you give an overview of Bamboo Capital Partners and why you chose to focus on impact investing?
JPS: Bamboo was created with the core belief of putting capital to work with meaning. We are focusing on companies that have a direct impact on emerging economies which benefit many people. Bamboo currently has €290 million under management and we are headquartered in Geneva with 5 offices globally. Our investment portfolio consists of 33 companies in 20 countries, focusing on energy, finance, and healthcare. We have three funds: two micro-finance and Oasis. The first micro-finance fund is in exit mode; we have returned 40 percent of capital and returns on the companies are between 16 and 39 percent. Our funds usually consist of a ten-year lock up of capital with an investment period five years.
3BL: How did you get into impact investing?
JPS: I started in 1999 at Dexia investing in fixed income investments which lended to micro-finance finance companies. After Dexia, I founded BlueOrchard Finance which lended to over 250 micro-finance banks in 40 countries. Bamboo was started in 2007 to focus on impact investing in emerging economies with the initial fund seeded by private investors and pension funds. We subsequently started another fund (Oasis) to invest in healthcare, housing, and energy, serving low-income communities and giving them access to capital.
3BL: What are your investment criteria?
JPS: We don’t focus on early stage or repeat investments. The typical size for investments is €5 million in Oasis, €10 million in the Micro-Fund. We are working on a healthcare fund where the investment size would be €20-30 million. Usually, companies we invest in have been around on average for five years and need re-capitalizing. We enter as minority investor, not a business owner. The first screen is the business model and what segment the company is in. Bamboo is very serious about social research and impact performance.
3BL: Are your investments more driven by business type or return potential?
JPS: They are equally driven. Bamboo won’t invest in a company with big return potential and no social impact and vice versa. We strive for both and aim for a 20 percent internal rate of return.
3BL: Is there a limit in terms of business size or geography?
JPS: We look for diversity in geography, and no position is greater than 10-15 percent of the overall portfolio. In micro-finance, a third of the portfolio is in each region. Other funds are more based in Latin America. With the proposed healthcare fund we are focusing in Asia.
3BL: How do you measure performance and what tools and analytics do you use?
JPS: We have access to worldwide databases of private equity deals and also look at deals currently in the market. Our analysis involves taking a deep-dive into the business model. We also build our own models to provide valuations and look at comparables in market. It’s a combination of the two.
3BL: What are your return hurdles per investment?
JPS: 25 percent rate of return per company and 20 percent overall for the fund.
3BL: What is your exit strategy for selling businesses?
JPS: We sell when we think value has been generated for investors. It’s really a question of value and haven’t seen an issue with buyers emerging.
3BL: Has it been challenging to raise capital for impact investing?
JPS: Progress has generally been good. We’ve seen a big increase in the past 20 years. There has been a trend of growing interest from individuals and institutions. Now, with real exits from businesses and the returns that have been achieved, it has been even more positive. Emerging markets provide many ups and downs but are the best source of growth; if you are looking to achieve a 20 percent return you have to look at emerging markets.
3BL: How do you measure impact?
JPS: Impact measurement is different with everyone. It really comes down to output versus outcome. I consider it a work in progress, as it is different for healthcare compared to energy compared to financial. As of now there isn’t a standardized way to measure across industries or companies.
3BL: Given the increased focus on impact investing do you see opportunities becoming more limited in the private equity space?
JPS: From Bamboo’s perspective, we don’t see that being the case. We have first-mover experience, access to proprietary deals, and don’t have to go through brokers. CEOs approach us as we are a niche player. As mentioned, we focus on early-growth stage and impact especially in micro-finance. Bamboo is not competing with big private-equity firms; they are our exit strategies. Large private-equity firms’ focus is positive for the sector but we really need to see how they get into impact investing.
Bamboo takes a bottoms-up approach—we’re trying to find jewels under the radar. Our deals are a combination of CEOs/brokers approaching us and our team is on the ground performing due diligence. We have senior investment managers traveling to meet target investments and our process is very much driven by team members. The strength of Bamboo is the strength of our team.
One important thing to note is that social impact is as important as financial impact. We have client surveys to measure impact. Performance is important but impact is equal. There are people out there focusing more on financial returns who call themselves impact investors but they are not.
3BL: What are your plans for future investments? Any broad targets?
JPS: We have three verticals. Micro-finance is one. Deposit-taking, fully rated, credit institutions are hugely important, and fintech is the future—mobile/correspondent banking and B2B platforms as opposed to traditional branch banking. Energy efficiency is the second. In Africa and Southeast Asia, 1.2 billion people have no access to clean energy. They are burning wood and kerosene. We are looking to offer affordable, clean energy access such as solar energy. The last is healthcare, and there are three opportunities: point of care at rural hospitals/pharmacies allowing physical access to people, medical care/equipment opportunities, and digital health, such blood tests and diagnostics. For instance, there is an exciting pipeline in Indonesia where corporates are seeking access to health care with major social impact which subsequently provides investors an exciting opportunity.
3BL: What are the future plans of Bamboo?
JPS: We’re considering two new funds in addition to our current funds: providing access to healthcare and energy. We are hopefully raising €500 million in the next 18-24 months with three verticals: micro-finance/financial inclusion, healthcare, and energy/energy efficiency. We see huge growth opportunities in these sectors.