This report is derived from a survey of managers of private asset impact funds (PAIFs), which are defined as investment vehicles “that have more than 50 percent of their non-cash asset[s] allocated both to private debt or private equity instruments and to emerging and frontier markets, with a development impact bias.” The survey sample comprises 198 PAIFs, which are associated with 94 investment managers and collectively hold USD 29 billion in assets, covering one third of the global PAIF market. This includes USD 18 billion in microfinance funds, representing 88 percent of the global microfinance market.
The PAIFs experienced growth in total assets of 17 percent during 2021, and their managers estimated they would record additional growth of 6 percent during 2022. As of December 2021, 50 percent of PAIF assets were allocated to microfinance, 24 percent to small and medium-sized enterprise (SME) development, and 8 percent to food and agriculture. Portfolio exposure per investee is highest in the climate and biodiversity sector at an average of USD 7 million and lowest when investing in the food and agriculture sector at USD 2 million.
The report outlines a range of impact metrics, such as: (1) “intentionality,” as evidenced by a PAIF claiming “a double- or triple-bottom line objective, integrating social, environmental and financial return considerations”; and (2) impact measurement against frameworks such as the UN Sustainable Development Goals (SDGs) or a system developed internally by the associated fund manager.
The surveyed PAIFs generated positive returns for investors in 2021, with unleveraged funds reporting returns of 2.6 percent and leveraged funds reporting returns of 2.3 percent.
This is a summary of a paper by Anne Estoppey and Ramkumar Narayanan, published by Tameo Impact Fund Solutions, December 2022, 170 pages, available at https://tameo.solutions/download/private-asset-impact-fund-report-2022.
By Vaughn Rajah, Research Associate
Additional Resources
Tameo homepage
https://tameo.solutions
SDGs website
https://www.un.org/sustainabledevelopment/
Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Download a sample at https://www.microcapital.org/products-page/.
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