Introduction
Urs Wietlisbach is one of the three founders of Partners Group, a global private market investment manager headquartered in Zug, Switzerland. It was founded in 1996 and now has 20 offices worldwide and USD 83 billion in assets under management.
Wietlisbach has a unique interest in impact investing and was instrumental in establishing PG Impact Investments, an independent impact investment firm fully owned by the non-profit PG Impact Investments Foundation. Though independent, PG Impact Investments has access to the global investment platform, infrastructure, and specialist resources of Partners Group. Being so closely aligned with Partners Group’s people, professionalism, know-how, and governance, an efficient and performance-driven approach to impact investing seems inevitable for PG Impact Investments.
PG Impact Investments is currently investing its first fund, which raised USD 210 million from a mix of private individuals and institutions. It has a team of fourteen full-time staff led by Urs Baumann, a former serial entrepreneur who now enjoys “giving back” to society through his role as CEO of PG Impact Investments.
PG Impact Investments’ mission is to improve the lives of underserved people by investing in companies that provide access to basic products and services, including those in the following sectors: financial inclusion, energy, health care, education, food and agriculture, and affordable housing.
Considerations for investors looking at impact
For first-time investors looking at the world of charitable or impact investing, it is important to understand the spectrum of options available. These range from purely charitable donations to support specific causes or projects to investments seeking a mainstream financial return (alongside impact) at the other. The spectrum of impact investment options runs as follows:
Charity entails personal donations to support specific causes or projects with no expectation of financial return. It is worth noting that although the “charity industry” is considered large, many charities might not be very well run and may have heavy overheads, excessive bureaucracy, and even questionable governance.
Philanthropy often involves supporting particular causes or projects with no expectation of returns, similar to charity. However, philanthropy is often more strategic and long term in nature than charity; investments are usually made in philanthropic foundations that are attached to a company or a family (office). For example, in addition to his activities at Partners Group and PG Impact Investments, Urs Wietlisbach manages his own philanthropic foundation, which has a particular focus on supporting education, sports, and socially disadvantaged people in Switzerland as well as an international focus on education and human rights.
Deep impact is a traditional form of impact investment management in which capital is raised from investors and invested on their behalf by professional and regulated investment managers, such as PG Impact Investments, with the ambition of generating positive social (or environmental) impact for an underserved population alongside an attractive financial return. The strategy and approach of impact investing tends to be similar to private equity in that investments are made from funds and recipient companies are generally private. Typical impact investments are relatively small in scale and focused on emerging markets.
Impact-at-scale is a term for mainstream private equity funds that also have a mandate to generate social or environmental impact. These funds, which are offered by several of the largest private equity managers, including Partners Group, are typically much larger in size than deep impact investment funds. They tend to operate on a larger scale and a longer track record, which can be a requirement or preference of large institutional investors.
Examples of PG Impact Investment’s financing projects
GoodLife - Founded in Nairobi in 2014, GoodLife matches trusted pharmaceuticals to customers across East Africa, where almost a third of the pharmaceuticals sold are believed to be counterfeit. By establishing stores in convenient locations that typically have a lot of traffic, such as shopping malls and near gas stations, non-counterfeit drugs can be distributed to a broad set of the local population. The project demonstrates that it is possible to both “do something good” and turn a profit. Eventually, this project may be sold to a strategic buyer, which, as a key exit plan, is essential for any project of this type.
Shared-X - Shared-X produces high yields of specialty and organic crops sold directly at premium prices. Under the shared prosperity model, Shared-X is providing 1,000 independent smallholder farmers in Latin America with farming know-how and market access, resulting in 3-5 times more income for these farmers.
Risks of impact investing
Most deep impact investment funds focus on emerging markets and make investments in several countries. In addition to the usual risk of the private equity of investments failing to make their expected return targets (in a worst-case outcome, an investor would not get any money back at all), two other types of principal risk surround traditional (deep) impact investments:
Currency risk is a difficult and challenging area, particularly for equity investments in which cash flows cannot be accurately predicted and hedged.
Political risk cannot be influenced by an investor. The only way to manage political risk is through a high degree of diversification, e.g., through investing in a fund that makes impact investments in several countries and geographic regions.
Urs Baumann
Urs Baumann is co-founder and CEO of PG Impact Investments. He has been active in impact investing since 2012 and has 25 years of experience as CEO of leading Swiss and international financial institutions and as a management consultant. His areas of expertise include investment banking, asset management, consumer finance, and credit management. His prior work experience includes Bellevue Group, Lindorff Group, Swisscard, and McKinsey & Company. He holds master’s degrees in business administration from the University of St. Gallen (Handelshochschule St. Gallen), Switzerland, and from Booth School of Business, Chicago, USA.
Urs Wietlisbach
Urs Wietlisbach co-founded Partners Group in 1996 and PG Impact Investments in 2015. He is a member of Partners Group’s board of directors and chairman of the markets committee, which is based in Zug. He has 29 years of industry experience. Prior to founding Partners Group, he worked at Goldman Sachs & Co. and Credit Suisse. He holds a master's degree in business administration from the University of St. Gallen (HSG), Switzerland. Nowadays, Wietlisbach spends around 70% of his time on Partners Group business and management issues. In addition, he is heavily committed to impact investing and was instrumental in establishing PG Impact Investments as a separate company from Partners Group. Wietlisbach is also interested in sports; he is involved in Swiss Ski and Sport Life, as well as in higher education and research, through his involvement in HSG. Additionally, he is an advisory board member of the Swiss Startup Factory.
Conclusions
Impact investing is indeed now a reality that both contributes to good causes and can secure a reasonable return on investments. Urs Wietlisbach has contributed significantly to the growth of this industry with the founding of PG Impact Investments.
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