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Impact | Emerging MarketsImpact | Emerging MarketsImpact | Emerging MarketsImpact | Emerging Markets

About Zheng Partners

Impact

  • Impact investing seeks to achieve investors’ risk and return objectives through investing in assets which will, over the holding period, create positive social and/or environmental outcomes.


  • We see such broad-based interest in having impact ideas integrated into portfolio management from the owners of capital across many regions of the World that we believe impact investing is a growing trend, not a fad.


  • So much so that we believe that in the not too distant future capital markets will move from a paradigm of risk-adjusted returns to one of risk-adjusted and impact-optimized returns.


You can download our note “Pricing Impact” which explains our ideas on impact investing.

Emerging Markets

  • Emerging markets have grown rapidly from 20% of global GDP in 2000 to 40% in 2019.


  • At this scale we think the question is how to obtain exposure, not if Private Equity in emerging markets has developed from virtual non-existence to an established industry which attracted 23% of global private equity funds raised in 2018.


  • Private Equity in emerging markets has better coverage of the faster-growing consumer-facing sectors than listed markets.


  • Compared to developed market private equity, private equity in emerging markets makes much less use of leverage and financial engineering and is much more focused on helping companies to grow. 

Pricing impact- By david wilton

Note Summary

 

        The growing global interest in incorporating impact criteria into the management of investment portfolios has created the opportunity to price both positive and negative externalities.


        Pricing externalities will lower the cost of capital to more impactful investments, increasing the commercial viability and sustainability of companies and projects which benefit people and planet.


        Impact investing is the vehicle through which this pricing of externalities can be achieved.

Before impact investing can play this role it needs some restructuring to align the process of impact investing with the established process of portfolio management. Designing an approach to impact investing which enables externalities to be priced into the cost of capital does not require radical change to current approaches to either portfolio management or to the concepts used to think about impact.


It simply requires that:

  1. The focus of impact investing be on the quantity of impact created by an investment, such as the amount of carbon off-set and the additional number of people with access to education;
  2. When assessing the potential impact of an investment, estimating the potential quantity of impact created is treated as a separate exercise from the application of value-judgements specific to the mandates of individual investors and;
  3. A general theory of impact is developed that can be used to assess the potential impact of asset classes. 

  

        The ability to assess the impact of asset classes is necessary as it enables institutional investors to incorporate impact top-down across the total portfolio.

This is game-changing because just three types of institutional investor – pension funds, insurance companies and sovereign wealth funds – manage around $81 trillion in assets, dwarfing the resources of DFIs and philanthropies.


        Enabling institutional investors to fully incorporate impact criteria into portfolio management provides the best chance of mobilizing the volum e of capital required to achieve the UN Sustainable Development Goals


        Enabling institutional investors to fully incorporate impact criteria into portfolio management will also lead the capital markets of the future to work on the basis of risk-adjusted, impact-optimized returns, increasing the commercial viability and sustainability of companies and projects which benefit people and planet.


                                     Fill out the form below to receive the note from David.

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Our Team

David E Wilton

David E Wilton

  • David is an experienced investor with an exceptional track record in investing with a double-bottom-line and successfully pioneering investment programs in Investing with Impact and Emerging Market Private Equity.


  • Prior to forming Zheng Partners David was Managing Director and Head of Impact Investing at Morgan Stanley Alternative Investment Partners where he created the Integro Impact Fund which as of December 2018 had a gross IRR of 18.8% over the three years since its first close and job growth of 12% CAGR.


  • Before joining Morgan Stanley David was Chief Investment Officer and Manager, Global Private Equity for the International Finance Corporation. David was the initial Manager of the Funds Group at its inception in 2000. At the time he left IFC in 2014 the funds’ portfolio was generating a net IRR of 19.3% since 2000 and job growth in the portfolio was running at over 15% CAGR.


  • While at IFC David was also Acting CEO of the IFC Asset Management Company during its establishment phase and a member of the Pension Finance Committee of the World Bank Group, with oversight of the management of the World Bank Pension Fund.


  • David was a member of the G8 Working Group on Impact Investing and Chairman of the Advisory Board of the Emerging Market Private Equity Association

Groups With Whom We Have Worked

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