HNWIs plan to make a private impact in healthcare

Rising numbers of Asian billionaires are looking to use networks of their peers to unlock impact investment opportunities in healthcare, as well as education and poverty alleviation, experts say. The drive is taking place in part because of the rise of wealth among relatively young first generation people in Asia.

“Billionaires are increasingly looking at these kinds of opportunities,” Amy Lo, chairman and head of UBS wealth management Greater China told AsianInvestor, which includes partnerships and co-investment opportunities.

Difficulties in finding the right deals and partners, as well as insufficient resources, have led high net worth individuals (HNWIs) to turn to private equity arrangements through personal networks, according to a September UBS family office report.

“Private equity remains a considerable share of all the investments among the billionaire families,” Lo said, adding that the trend is increasing.

Healthcare, in particular, is a major area of impact investment focus among Asian HNWIs, said James Gifford, UBS senior impact investing strategist.

“Asian investors have expressed a strong interest in impact investing in healthcare and healthcare technology,” he told AsianInvestor. “This is likely a reflection of the strong growth of healthcare as a theme in Asia.”

Areas of healthcare impact investment proving popular with Asian HNWIs include oncology, hospital infrastructure, telemedicine, mHealth, healthcare training, ambulance services, and cardiology, Gifford added.

Another preference for impact investing in Asia is to use family offices and other traditional ways of doing impact investing, such as through foundations and endowments, according to Steven Seow, Mercer’s Asia head of wealth.

“Increasingly, we are also seeing people use the family office as the vehicle to do it,” he told AsianInvestor,” generally through strategic allocations in environmental, social and governance (ESG)-related assets.

However, this type of impact investing in the region remains quite rare. “The concept of investing in ESG-related manager strategy, and having ESG as part of the manager selection — I have to say that’s still not as matured in Asia,” said Seow.

Young and wealthy

Lo attributes the rise of networking and impact investment in the region to the relatively young age of Asian billionaires versus those in other regions.

“All these kinds of networking, especially among the young billionaires, they will be interested,” she said. “For younger billionaires, they have a passion to philanthropy and also impact investing,” she added.

On average, Asian billionaires are 59 years old, versus 66 for their European counterparts, and 67 in the US, according to the Billionaires Insights 2017 report, produced jointly by UBS and PwC, released October 27. The average age for Chinese billionaires’ is even lower, at 55.

UBS’s Oncology Impact Fund demonstrates the level of interest among Asian investors in healthcare impact investing. The bank launched the fund last year with the aim to invest in cancer treatments, early stage oncology, academic research, and better access to cancer care in the developing world, a company press release announced in April 2016.

It raised $471 million for the fund, with Asia Pacific clients accounting for 60% of total funds raised, a UBS spokeswoman said. Significantly, Hong Kong booked the highest amount of any market globally, and Singapore had the third highest, the spokeswoman added.

Changing regional demographics is a major factor, according to Lo. “The market for cancer drugs is expected to grow really fast,” she said, “due to aging population and also expanding middle class in the emerging market with better access to care, so oncology is also one of the areas fast growing.”

A February Standard Chartered report said that emerging markets currently account for two-thirds of the world’s elderly, defined as those 65 and above. This figure is expected to rise to around 80% by 2050.

UBS’s impact investing strategist points out two other demographic trends to explain the shift towards impact investing in general. “Nearly 70% of millennials are either ‘interested’ or ‘very interested’ in socially responsible investing,” Gifford said, referring to a 2015 report produced jointly by Oppenheimer Funds and Campden Wealth Research.

The growing economic power of women is also worth noting, he said, with 88% of surveyed women in the US, UK, China, India, Singapore, and Hong Kong expressing a desire to invest in organisations that have a social impact, citing a 2014 Center for Talent Innovation report.

Aside from healthcare, other key areas of impact investing in Asia are education and poverty alleviation, especially in emerging markets, said Seow.