We've seen an influx of private equity capital into healthcare in recent years. Has it been a good thing? This month IE CIO Priya Parrish and VP Sophia Friedman write for PE Hub (paywalled).
Critics say PE leads to poor patient outcomes due to a focus on profit over patients. A recent study led by researchers at Harvard Medical School found that patients at private equity-owned hospitals are more likely to fall, get new infections and experience other forms of harm during their stay.
But it doesn't have to be this way.
Private equity investment in healthcare need not lead to negative outcomes. There are a myriad of positive motivations for focusing on the sector and thus we as investors can seek competitive private equity returns while ensuring that the companies deliver high-quality, accessible and often improved healthcare solutions to consumers. That has been our experience investing with several buyout and growth equity firms, including Martis Capital, Ascend Capital Partners, and The Vistria Group.
Bridgespan, Capricorn, & Skoll: Can Foundations Achieve Greater Impact? (PDF)
IE CEO Jessica Droste Yagan writes: I've been glad to see for myself, anecdotally, that more charitable foundations and donor advised funds (DAFs) are considering the impacts of their investments on their missions, and taking intentional steps to make those impacts more positive. This study, by Bridgespan Social Impact, Capricorn Investment Group, and Skoll Foundation, helped me put that observation in perspective by presenting broader data about the field and its embrace of impact investing (or lack thereof).
While it is true that the numbers are growing, the median foundation is allocating only 5% of its investable assets to impact investments. Interestingly, the largest endowments (over $1B) showed much less impact investing as a percentage than their smaller counterparts.
It's clear to me that foundation endowments and DAFs, controlling $1.2T in tax-advantaged dollars that are legally committed to charitable purpose, should be first in line to ensure positive impacts from their investments. This report also includes some practical solutions for those looking to move the needle further in this direction, and organizations like Mission Investors Exchange and Confluence Philanthropy (specifically for philanthropists) stand ready to support this movement. I'm optimistic it will continue in the right direction and at a faster pace as more philanthropic leaders realize what is possible!
FCA: Finalised Guidance on the Anti‑Greenwashing Rule (PDF)
Ander Iruretagoyena, IE VP writes: Following the SEC's announcement on Climate-Related Disclosures this month, the British equivalent, the Financial Conduct Authority finalized its guidance on their own new Anti-Greenwashing Rule. This guidance applies to all firms communicating in respect of a financial product or service’s sustainability characteristics, to persons in the UK – and it goes into legal effect in June. The guidance makes it very clear that any reference to sustainability characteristics must be “capable of being substantiated” and also “complete.” It goes on to warn that “firms should think carefully about whether they have the appropriate evidence to support their claims”.
They set out some examples of what they consider greenwashing, which are helpful for the industry. The $1M question will obviously be how stringently the rule will be enforced, and what consequences violators will face. However at least now there is a clear legal basis against it.
Alcanza Clinical Research, the medical investigation network that boosts underrepresented patient populations, unveiled three new facility acquisitions in the past month that will expand its reach. First, Innovation Medical Research Center in Palmetto Bay, Florida. Second, FDI Clinical Research based in San Juan, Puerto Rico. And third, Kansas City Research Institute in Missouri. These mark Alcanza's 9th, and 10th, and 11th public acquisitions since 2021.
Next Billion, a fund investment of ours, announced a $250 million close of its first Digital Growth Fund. With participation from Impact Engine as well as Capricorn Investment Group, responsAbility Investments AG, and others, the fund is geared toward market-leading tech investments in emerging markets.
Vacuumschmelze, the rare earth permanent magnet maker, was awarded a $111.9 million federal tax credit for the construction of its first US-based manufacturing facility in Sumter, South Carolina. The tax credit, which comes as part of the US Inflation Reduction Act, will help VAC produce magnets for use in electric cars by automaker partner GM, among other uses. The grand opening is planned for 2025.