Why TPG’s Rise Fund could redefine impact investing
Thursday, September 15, 2016
About three years ago, TPG Growth founder and managing partner Bill McGlashan relocated from San Francisco to Mumbai for a year to oversee the firm’s investments in emerging markets. TPG Growth is the growth equity and middle market investment arms of global private equity buyouts giant TPG. McGlashan’s year-long India stay has had several outcomes for TPG Growth, but the most unlikely one was unveiled this week. The New York Times (NYT) reported on Monday citing unnamed sources that TPG Growth is setting up a social impact fund. It is dubbed the Rise Fund and aims to invest more than $1 billion over time.
A $1 billion kitty is unprecedented in the impact investing universe. Given McGlashan’s and TPG Growth’s interest in emerging markets, it would not be unexpected for a sizeable chunk of that capital to flow into India and the larger Asian region. The allocation of such substantial resources specifically for impact businesses is without doubt a huge leg-up for a sector that has been starved for funds. Given TPG’s growth investments focus, the Rise Fund could well become an important source for the much-needed follow-on growth capital that impact businesses generally find hard to access from conventional private equity investors.
However, that will depend on the kind of businesses the Rise Fund plans to back as part of its impact agenda. The NYTarticle says investments from the fund, which will be overseen by McGlashan, are likely to be on the lines of TPG Growth’s $40 million bet on Myanmar-based telecom towers company Apollo Towers in late 2014. The deal represented the first major global private equity bet on Myanmar after the country emerged from military rule.