NB Health Care

Wednesday
April 27
2011

Colm Fay

Guest Post: Competing in the Inaugural International Impact Investing Challenge

RE: Vive India is a $15 million reinsurance fund for micro health insurance providers in India. These providers offer low cost health insurance to those at the Base of the Pyramid who are often unable to afford the costs associated with even minor health emergencies. At best this can result in families falling below the poverty line as a result of having to sell off assets, liquidate savings or take out high interest loans. At its worst, it can result in needless death from preventable conditions like diarrhea, malaria or maternal mortality.

Designing a solution was the challenge of behind the inaugural International Impact Investing Challenge on April 8 in New York. My team was among 12 student teams from top business schools across the US and UK gathered in J.P. Morgan’s New York headquarters to present their proposals, ours being RE: Vive India. The teams were asked to design an investment vehicle capable of absorbing $10 million to $50 million that has a positive social or environmental impact while also delivering competitive returns for institutional investors.

Teams had previously submitted a two-page prospectus for their fund and were required to prepare a 10-minute pitch that would be delivered on the day to a panel of judges that included the CEO of the Calvert Foundation, the Director of Strategy and Development at the Global Impact Investing Network and a partner in Sustainable Business & Innovation at Nike among many other high-profile individuals from the impact investing world. Proposals were judged on their understanding of market performance, risk management and the interdependence between business, society and the environment.

RE: Vive India was structured as a reinsurance fund in three tranches, one that would appeal to donors as the first loss position, one that would appeal to institutional impact investors in the junior position and finally a tranche that would appeal to patient capital investors in the senior position.

After all 12 teams presented their proposals in two concurrent room, five teams were chosen to present again in the final round during the afternoon, which was attended by about 180 people, including employees of JP Morgan as well as external guests. Going into the final round we knew that there would be some strong competition, but that this would be a great opportunity to present our idea to a wider audience and were looking forward to questions from a wider panel of judges. Along with the RE:Vive team, the other finalists were:

  • Native Energies Fund, Said Business School, University of Oxford – a fund designed to develop renewable energy projects on first nations lands that maximizes financial, social and environmental returns to first nation communities.
  • Impact Shares, Stanford Graduate School of Business, Stanford University – an equity instrument that reflects the social or environmental impact of a project and integrates financial and impact returns
  • Mobile2Mobile, The Wharton School, University of Pennsylvania – a fund that invests in mobile service providers targeting the Base of the Pyramid
  • Grain Depot Fund, Kellogg School of Management, Northwestern University – a fund designed to finance the construction of grain storage depots in rural Indian villages to prevent spoilage and increase returns to farmers

After the pressure of the final pitches was over, the teams had a chance to to mingle with the other students and guests before the announcement of the winning entries. A highlight of the experience was the genuine atmosphere of collaboration among the teams and a shared passion for the role of business and investing in creating sustainable social and environmental impact.

The awards reception included remarks from Christina Leijonhufvud, Head of Social Finance at J.P. Morgan, Paul Tarini, Senior Program Officer for the Pioneer Portfolio within the Robert Wood Johnson Foundation and David Chen, Partner at Equilibrium Capital Group who issued a challenge to investors in the room that several of the proposals presented should be put in front of real pools of capital.

The awards presented were:

Overall 1st Place ($12,000): Grain Depot Fund, Kellogg School of Management, Northwestern University

Overall 2nd Place ($5,000): Native Energies Fund, Said Business School, University of Oxford

Overall 3rd Place ($3,000): Impact Shares, Stanford Graduate School of Business, Stanford University

J.P. Morgan Award Emerging Markets Award ($10,000): RE:Vive India, Ross School of Business, University of Michigan

McCall Foundation Environmental Sustainability Award ($10,000): Native Energies Fund, Said Business School, University of Oxford

(Above: J.P. Morgan Emerging Markets Award Presentation to Team RE:Vive. Pictured (L to R): John Buley, Managing Director, J.P. Morgan ; Mark Milstein, Director of the Center for Sustainable Global Enterprise, Johnson Graduate School of Management ; Andrew Merrill, MBA 2011 ; Colm Fay, MBA/MS 2012 ; Laura Frey, MBA/MS 2011 ; Amrita Vijay Kumar, MBA/MS 2011 (all Ross School of Business) and Jamie Jones, Associate Director of the Social Enterprise at Kellogg Program, Kellogg School of Management

The Ross School of Business was represented at the competition by Laura Frey, Andrew Merrill, Amrita Vijay Kumar and myself. We were assisted in our preparation two Erb Institute alumni, Kipp Baratoff (2008) and Mike Hokenson (2005) and by many members of the wider Erb, WDI and Ross communities for which we are incredibly grateful.

Overall, the inaugural International Impact Investing Challenge was a huge success and demonstrates the opportunity for students of these schools to become leaders in what J.P. Morgan is calling an “emerging asset class“. Hopefully some of these ideas attract real investors and that alumni of the challenge go on to successful careers that have a positive impact by blending both social and financial returns.

To view prospectus and presentation documents for each of the proposals visit: http://www.impactinvestingchallenge.org/presentations.html

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Categories
Entrepreneurship, Health Care
Tags
events and competitions, health care, impact investing, investment fund, microinsurance