Deal focus: LGT plugs Aspada into global impact platform

LGT Lightstone Aspada completed its first India investment a fortnight ago with a INR1.4 billion ($19.6 million) commitment to Kauvery Hospital. The company currently has seven facilities and there are plans to buy or build up to 15 more within five years, improving access to healthcare services in the country’s relatively deprived southern regions.

This was the latest in a string of collaborations between LGT’s impact investment team and Aspada, which helped convince them that they were well-matched partners. “India is the most developed market for impact investing in Asia,” says En Lee, head of sustainable and impact investments in the region for LGT. “Our relationship with Aspada began more than a year ago, and once we got to know the team, we realized there was a lot of alignment in strategy.”

LGT Lightstone has $400 million in assets under management globally. With more institutional investor interest in the impact space, $1 billion is now seen as a realistic target. The goal is to build a best-in-class platform that covers Africa, Latin America and Asia. Aspada was acquired to drive the India portion of this initiative. 

The impact investment firm was established in 2009 by Open Society Foundations, a George Soros-founded charitable institute operating through the Soros Economic Development Fund (SEDF), in conjunction with Omidyar Network and Google. There have been 20 investments and five exits to date; the portfolio is worth around $100 million.

Aspada initially invested from a $17 million venture capital fund known as SONG but this was subsequently restructured as an evergreen vehicle, at which point Omidyar and Google exited. LGT bought the bulk of the portfolio from SEDF and the 12-strong team came with it. Lightstone Aspada will deploy in a range of $4-40 million per deal and provide support in the form of human capital development, strategic planning, capital raising, back-office management, and governance.

“LGT Lightstone seeks investments that offer attractive risk-adjusted market returns but also generate positive and measurable social and environmental impact, consistent with a private equity timeframe,” Lee says. “We want to back effective solutions that can be commercialized at scale.”

For LGT, the acquisition is about giving individual and institutional investors access to impact in ways that were not previously available. It is not the only asset manager looking to get there, organically or through M&A.

“One of the reasons Aspada switched to permanent capital in earlier years was because the jury was still out as to whether you could get attractive risk-adjusted returns from impact investments,” Lee adds. “With the entry of PE managers – some of which have raised billion-dollar funds – impact investing which was initially seen as an extension of philanthropy backed by private individuals and families has matured into a growth PE strategy backed by institutional capital.”   

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• Topics
• South Asia
• GPs
• Venture
• India
• Aspada Investments
• LGT Capital Partners
• Impact investment