NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Saturday, April 30, 2016

UBS Wealth Management is proving investors in Asia will warm to funding projects with social and environmental benefits if the potential returns deliver.

Earlier this week UBS closed the $471 million UBS Oncology Impact Fund, a vehicle aimed at accelerating cancer cures by investing in companies involved in early stage oncology treatments. The “impact” part — grants for academic cancer therapy research and access to cancer care in developing countries — is funded by 20% of the manager’s performance fee and 1% of royalties on drugs that come to market.

This global initiative — expected to earn an internal rate-of-return of 15% to 20% — is notable for its nearly half-billion-dollar size in the arena of impact investing and for the fact at least 60% of the fund’s assets reportedly are from investors in Asia. The fund manager is MPM Capital, a U.S. venture investing firm that has nurtured successes like Pharmasett (later bought by Gilead Sciences), which developed Solvadi, a blockbuster hepatitis C drug.

“This notion that impact investing doesn’t work in Asia, I think is completely debunked,” says Simon Smiles, chief investment officer for UBS Wealth Management’s ultra-high-net-worth practice. “If you have a really good investment opportunity that has a strong positive social impact, it clearly resonates in Asia.”