The Abraaj Group has a grand ambition: to transform healthcare delivery systems for low- and middle-income populations in 10 of the largest cities in sub-Saharan Africa and South Asia.
So far, investments in the $1 billion Abraaj Growth Markets Health Fund have delivered healthcare services to more than 3 million patients per year; this is expected to expand to more than 10 million by 2020.
Partner Khawar Mann, who heads up the firm’s healthcare team, says the healthcare fund has the same return expectations as Abraaj’s private equity funds. “We believe there is no trade-off in achieving commercially strong returns and delivering strong societal impact.”
The fund’s LPs include CDC Group, Employees’ Retirement System of the State of Hawaii, the International Finance Corporation, the Overseas Private Investment Corporation, Teacher Retirement System of Texas and the Bill & Melinda Gates Foundation. The IFC called the fund “pioneering” in its dedication to healthcare targeting social impact, while OPIC said the fund would “play a vital role in financing healthcare services and provide significant knowledge transfer”. It also attracted capital from big medtech firms, including Philips Healthcare and medical device company Medtronic.
“They are important partners, bringing not just access to equipment and medical products, but, crucially, access to their global and local experience in our markets, training health professionals, IT, big data, etc,” Mann says, adding that some of the investee companies could become customers. “But in each case our CEOs evaluate the best value and most effective solution for their businesses before making such decisions.”
Philips for its part, invested in the fund because “we felt that we had that directionally aligned view, and we needed to put money to work and just get going, because unless we do something, it never moves”, chief executive Frans van Houten said at the Scaling Impact Investment Forum.
In a recent report, Abraaj founder and chief executive Arif Naqvi stressed this idea that the fund’s investors “bring more than just capital”.
“In coming together as an example of blended finance, we have collectively marshalled our resources, capital and capabilities to help attain SDG 3.”
SDG 3 is “ensure healthy lives and promote well-being for all at all ages” and the fund is specifically aimed at sub-goal 3.4 –reducing premature mortality from non-communicable diseases by one-third by 2030.
“In addition to the goals of accessibility, affordability and quality, our health strategy is focused on strengthening and prevention,” Mann says. “Each of these five goals have two KPIs attached to them, making a total of 10 ‘backbone KPIs’ that are customised to each of the fund’s healthcare facilities via quarterly targets.”
Kito de Boer, managing partner and head of impact investing, says Abraaj uses five elements to distinguish impact investing: stakeholder engagement; independent monitoring; catalyst; systems; and multi-phase investing horizons.
“By being laser-focused on these elements, we get right into the heart of impact investing and ‘how’ it can be delivered most effectively. This is the mandate and driver behind our impact investing platform.”