The private sector plays a critical role in the economic success of developing countries and emerging markets by supplying more than 90% of jobs. Local companies, which are mostly small and medium-sized firms (SMEs), typically face challenging growth bottlenecks. They struggle to obtain growth capital and lack expertise in many areas, ranging from operations to environmental and social risk mitigation. Obviam invests to overcome these hurdles through the provision of finance and business expertise. Our investments unlock sustainable private sector growth, create job opportunities and ultimately reduce poverty in our target markets. Due to the lack of depth in local capital markets, our investments also offer a way of gaining exposure to the fastest-growing companies in our target markets, thus offering attractive return and diversification opportunities that would otherwise be inaccessible.
Our investments are selected carefully for their expected impact contribution. The bottom-up analysis of expected impact is a key part of our investment process. The types of impact targeted may differ significantly from one investment to another.
A key theme in our portfolio is the creation of markets by promoting increased diversification in the financial sector. Depending on the context, the strategies of individual investment opportunities may focus on various under-served target groups, including SMEs looking for scarce growth or working capital, marginalised regions or states, underdeveloped sectors of the economy or specific groups of the local population.
Many of our investments also have sector-specific impact thesis; for instance, in the high impact sectors of healthcare, education, basic infrastructure, renewable energy, agriculture and access to finance.
Our investment process has been refined to incorporate evolving best practice and lessons learned over the past two decades. As few investment and business concepts in developing countries and emerging markets benefit from a long track-record, we place a particular emphasis on the careful selection and rigorous screening of potential local partners and companies.
From first contact to investment, our investment process typically takes several months and includes a detailed analysis of all relevant aspects from strategy to implementation. We recognise that any long-term investment is an investment in people and we get to know our project partners through on-site visits that last several days; we also visit past, current and prospective business partners and make comprehensive reference checks.
Along with the standard commercial and integrity clauses, our investment agreements also include far-reaching monitoring rights, such as seats on supervisory bodies, detailed reporting obligations and inspection rights. In addition to development impact, a particular focus is placed on building responsible businesses through the dissemination of best practice in terms of environmental, social and governance (ESG) matters.
After our initial investment, we monitor all investment projects closely over the investment cycle. Our seats on supervisory bodies and other contractual rights enable us to engage with local partners. We review the progress in achievement of investment objectives, mitigate potential conflicts of interest, evaluate fiscal health and scrutinise valuations of our investments. We work closely with our local partners to seek suitable solutions as required, and advise them with the objective of ensuring full compliance with our ESG requirements.
Moreover, we offer tailored support interventions to our local partners and portfolio companies via a technical assistance window. We provide capacity-building support for funds, financial intermediaries and company management teams, thus enabling them to benefit from specialised third-party advice at advantageous conditions.
Obviam is deeply rooted in the development effects and impact investing ecosystem, and is unparalleled among privately owned impact investment managers.
We have had the sole responsibility of managing the investment and day-to-day business of the Swiss Investment Fund for Emerging Markets (SIFEM) – the official Development Finance Institution (DFI) of Switzerland – since its establishment.
We represent SIFEM as a member of the Association of European Development Finance Institutions (EDFI), have twice held seats on the association’s board, and contribute to numerous EDFI working groups to advance cooperation on topics such as legal terms, ESG requirements and harmonisation of development effects measurement. Investment success often depends on collaboration among investors, and members of EDFI tend to work closely together in the field.
Obviam is also a signatory of the UN Principles for Responsible Investing (UN PRI) and of the IFC Impact Principles. The Obviam team has been involved in the creation of the Emerging Markets Private Equity Association (EMPEA), in which Obviam is still a member. Obviam is also a member of the Global Impact Investment Network (GIIN), Swiss Sustainable Finance (SSF), the African Private Equity and Venture Capital Association (AVCA), the Latin American Private Equity and Venture Capital Association (LAVCA) and other relevant industry associations.
We invest in many countries that have high systematic risks compared with developed countries. Identification, mitigation, monitoring and management of these risks are central to Obviam’s core duties, since they affect the financial health, sustainability and ultimately the ability of our investments to generate long-term development impact. Obviam has a comprehensive, portfolio-wide internal risk rating system that serves as a tool for our investment team to manage the numerous risks inherent in our target markets.
“Our investment approach combines the institutional quality and network intelligence of a development finance institution with the flexibility and entrepreneurial spirit of a privately owned impact investment manager.”
As Chief Investment Officer (CIO) of Obviam, Andrea oversees our investment function.