Financial Return plus Impact

Obviam's investment philosophy is guided by the belief that investing in commercially viable companies in emerging and frontier markets can provide investors risk adjusted returns, as well as generate sustainable, long-term positive impact. Investing in Small and Medium Enterprises (SMEs), mostly via private equity funds and financial institutions, is core to this philosophy.

From a financial perspective, emerging and frontier markets private equity has a number of particularities that can offer investors attractive risk adjusted returns. SMEs in these markets often face less competition, and benefit from a more robustly growing consumer base. Moreover, the long-term and hands-on nature of private equity is particularly attractive in these markets, where creating value through hands-on operational, strategic and business improvements can deliver significant value.

Moreover, investing in SMEs contributes to Obviam's impact objectives. In many emerging and frontier markets SMEs are a critical driving force for entrepreneurship, economic growth and job creation. This is particularly true in frontier markets, where SMEs have difficulties in raising capital for growth, yet represent a significant amount of business activity, contribute significantly to Gross Domestic Product (GDP), and account for large amounts of employment. Creating stable employment opportunities at reasonable wages is increasingly recognised as one of the best manners in which to take people out of poverty. Indeed, the United Nations Development Programme (UNDP) recognises employment as a key link between economic growth and poverty reduction, whereby productive and remunerative employment can help ensure poor people share the benefits of economic growth. Investing in SMEs assists to reduce poverty.

Responsible investment, specifically integrating Environmental, Social and Governance (ESG) matters in investment decision-making and management, is a key tenant of Obviam's investment philosophy. ESG matters are of increasing importance to investors, companies and society. As an investor in SMEs in emerging and frontier markets, Obviam has a particularly important role to play in promoting responsible best-practice approaches. The failure, for example, to establish health and safety standards for workers, to address poor governance structures, or establish best-practice approaches to waste management can result in financial liabilities, and is misaligned to Obviam's objectives of creating and growing viable businesses and jobs.