Sarona discusses the role of Blended Finance in achieving the third Sustainable Development Goal
How can the world possibly meet its commitment to achieve Sustainable Development Goal (SDG) #3 – Good Health for All – by 2030? In mid-April, at the inaugural Financing & Innovation in Global Health (FIGH) Forum, private, public, and non-profit innovators came together to figure that out.
Health-tech, both in hard technology and services, is developing incredibly quickly, delivering improved speed, better results and lower cost than existing approaches. And in that, it offers developing countries an opportunity to leapfrog to world-class health solutions. Yet who will roll that out across emerging markets? And who will pay for it?
The two-day forum, organised alongside the IMF’s and World Bank’s annual spring meetings in Washington, brought together 250 participants in an attempt to solve those questions. Sarona was invited to join the conference as a private sector investor and a recognised pioneer in the Blended Finance space.
Blended Finance – the practise of blending public sector funding with private capital to achieve mutual goals – has recently risen to favour by private and public actors alike. As a financing model, it offers a win-win solution, and is therefore able to catalyse large pools of capital.
At one FIGH discussion, health-tech innovators and investors wanted to know, “Is there any way we can speed up the application of our innovations by using Blended Finance models?” Sarona’s CEO, Gerhard Pries, was one of the invited speakers at the session, offering insights on structuring, fundraising and investment of public and private capital.
The Sarona Frontier Markets Fund 2 has often been showcased as a successful Blended Finance example. The private equity fund was supported by an equity investment from Global Affairs Canada (GAC, a Canadian government department), and a credit guarantee from the Overseas Private Investment Corporation (OPIC, a U.S. government agency). While the GAC capital provided first loss protection and profit sharing, OPIC’s guarantee ensured access to attractively-priced leverage. Together, these two players catalysed $135mm of private capital by enhancing investors’ risk-adjusted return. Going forward, Sarona is speaking with these and other agencies to design new Blended Finance vehicles for Frontier and Emerging Markets.
“The forum in Washington affirmed the urgent need for public-private partnerships to unlock new sources of capital that can transform the global health agenda” comments Mr Pries. “And the FIGH initiative is a great opportunity for governments, civil society and the private sector to both learn from each other and work out their historic mutual mistrust” he concludes.
While the SDGs are new, Sarona’s commitment to these goals is not. We believe that through our private equity funds programme, we can make a scalable and significant contribution towards these goals. We invest in healthcare, education, agribusiness, manufacturing and many other sectors that provide benefits to the emerging middle class in frontier and emerging markets. By embedding the SDGs in our monitoring process, we measure and evaluate the “impact” of our investments on society and the environment.
FIGH was convened by Convergence, a platform supported by GAC that enables private and public funders to coordinate their design of Blended Finance solutions, and by Global Development Incubator.
Picture (left to right): Priya Sharma, Policy and Innovative Financing Advisor at Center for Accelerating Innovation and Impact, USAID; Gerhard Pries, CEO and Managing Partner, Sarona Asset Management