Vital is pleased to be recognized with the 2025 Real Leaders of Impact Investing award. Now in its sixth year, the list is a compilation of investors dedicated to reshaping business practices globally through impact-driven capital.
The award celebrates Vital’s commitment to transformative impact in Africa and other emerging markets, positioning our work among firms “making a tangible difference in the world by funding businesses that matter.”
View the full list here.
Vital Capital is pleased to once again be named as Private Equity Manager of the Year by Environmental Finance’s Sustainable Investment Awards. These awards recognize the work of the world’s leading impact investors and, according to the judges, “highlight emerging pockets of best practice.” This prestigious recognition underscores Vital’s leadership and innovative approach to impact investing, particularly in the emerging markets of sub-Saharan Africa.
“A growing number of investors today are aligning their activities to the Sustainable Development Goals – not just to generate positive impact, but also to maximize the performance of their investments. So, this recognition for the second consecutive year as Private equity manager of the year by Environmental Finance’s prestigious Sustainable Investment Awards is a true honor,” Nimrod Gerber, managing partner at Vital Capital, expressed.
“From delivering first-time household tap water access in India’s drought-plagued Karnataka region to unlocking the potential of local smallholder farmers in East Africa, everything we do has the potential to transform millions of lives.
“With this win, we reaffirm our focus on impact-led value creation, so that we can build more future-proof companies that will bring transformative impact to the underserved communities who need it most.”
Read more about Vital’s win here.
Vital Capital Managing Partner Nimrod Gerber recently offered his insights for a Financial Times article about the relationship between impact investing and ESG. Among other leading sustainable investors, Gerber shared his perspective on the significant untapped opportunities for impact investing across Africa.
“You’re going to have a billion new consumers very soon consuming potable water, basic healthcare, better food, infrastructure, and education,” Gerber explained. “Silicon Valley is not looking at how to solve these huge challenges in Africa. Creative, smart African entrepreneurs that live the problems are developing the solutions. It’s a winning formula.”
Read the full article here.
As we settle into 2024, we consider the outlook for private equity investment in Africa. Among the factors attracting investors to the continent are its rapidly growing population of 1.4 billion people – of which 60% are below the age of 25 – and an increasing demand for essential services such as infrastructure, agriculture, education, and healthcare.
There are rich and varied opportunities in Africa, with the promise of strong financial returns and social impact, but a key stumbling block continues to trip up General Partners and limits further investment: the failure to understand that a foreign strategy will not work here.
In an article for AltAssets, Vital Capital Managing Partner Nimrod Gerber shares his views on why Africa requires its own private equity playbook – one that accounts for the economic, legal, and cultural diversity on the continent, and involves a custom approach to greenfield opportunities, controlling stakes, and investment exits.
Read the full article, available here: https://www.altassets.net/knowledge-bank/by-pe-focus/large-buyouts/why-africa-requires-its-own-private-equity-playbook.html
The Vital Capital team is delighted to receive two Environmental Finance IMPACT awards: one for Asset manager of the year – mid-size and the second for impact measurement and metrics (in-house IMM framework). These awards recognize the work of the world’s leading impact investors and, according to the judges, “highlight emerging pockets of best practice.” At a time when investors across the globe are increasingly seeking to align profit with purpose, these honors are all the more meaningful.
The recognition is testament to Vital’s dedication to our investees and to ensuring their future sustainability – as well as our thoughtful impact measurement and management, which drives tangible outcomes for our investors, communities and the environment.
We are proud to continue to move the dial forward towards greater accountability and standardization. Find more information on our award wins here.
At Vital Capital, we believe that understanding the challenges facing our end users is key to developing sustainable solutions that deliver maximum impact.
That’s why we don’t engage only with investors and our portfolio companies as part of the investment process – but also with the communities directly served, through beneficiary studies conducted at the outset of projects. The findings provide a baseline to help quantify the potential impact of an investment. They also help us to refine our approach and develop better, more relevant solutions that build community trust.
We’re pleased to share the key outputs and learnings from the beneficiary studies conducted by our environmental infrastructure platform, Vital Environment, with our support, for two water projects in Karnataka, India. The Raichur Water Project will provide the necessary infrastructure to deliver tap water to 1.77 million people, 64% of whom will be receiving first-time household tap water access. The study findings indicate that the impact of the infrastructure is expected to disproportionately benefit women and girls, 78% of whom are fetching water 2-3 times per day. The Karnataka Irrigation Project involves the construction of piped irrigation infrastructure for 12,000 farms in the severely drought-stressed region, benefitting over 60,000 people, where 32% of the population participates in seasonal climate-induced migration for basic income.
We invite you to review the special feature below and welcome your feedback. We look forward to sharing the results of our impact assessments as the project develops in the years ahead.
Vital Capital is proud to be recognized by Krutham (formerly Intellidex) as Asset Manager of the Year in the inaugural Africa Impact Investment Awards, which recognise valuable work in promoting, financing and participating in investments that yield social and environmental benefits alongside financial returns.
The AIIA awards shine a much-needed spotlight on excellence in impact investing in Africa, aiming to increase knowledge of the sector so that it can grow and prosper. With public resources alone unable to plug the black hole in the financing needed to provide decent living standards across the continent, initiatives like the AIIAs are essential to build interest and catalyze investments in this area.
Over the next five years, impact investors are planning to increase allocations to emerging markets, according to a new report by Global Impact Investing Network. And Sub-Saharan Africa is proving to be a firm favourite, with the greatest proportion of investors (56%) stating their plans to increase impact assets in the region, zooming in on sectors that inevitably meet the basic needs of its communities.
“As macro-economic uncertainties in developed markets persist, geographic priorities are evolving – and so are perceptions of volatility and risk in emerging markets. Africa is set to draw in a new wave of impact investors – and rightly so,” said Head of ESG & Impact, Tamar Pashtan. “We are thrilled to be named among the leading firms making successful impact investments on the continent. By helping to showcase the world of opportunities across the continent, together, we can drive the modern African narrative with positive, tangible outcomes and strong financial returns.”
Read the published case study to learn more about why Vital was selected for the award.
By Francisco Machado, Investment Director
Until recently, Ghana was considered a macroeconomic and political model in sub-Saharan Africa; in 2019, the World Bank described it as ‘a rising growth star’[1]. However, in May 2023, the IMF signed a new bailout agreement worth $3 billion over three years. It’s a program that’s widely seen as a band-aid for a host of long-term economic challenges facing the country – a net importer – including a balance of payments deficit. The nation’s public debt is nearly as large as its annual economic output, inflation has been running at over 40% in 2023[2] and Ghana’s currency, the Cedi, has fallen by more than 45% against the dollar since January 2022[3]. The bailout will do little to address poverty, create new jobs, boost salaries or address the rising cost of living facing Ghanaians.
Ghana is not alone in facing economic headwinds and other countries on the continent face a similar fate driven by a range of factors, including the Russia-Ukraine conflict, the rising cost of food imports, a reduction in foreign direct investment and rising interest rates globally that are increasing cost of debt servicing. Kenya, East Africa’s largest economy, has recently agreed new funding amounting to around $1 billion to help relieve pressure caused by rising debt servicing and effects of drought.
One solution to help advance economies in Africa and provide some insulation from global economics might lie in the growth of local institutional investors. They are uniquely positioned to help boost industry, agriculture and overall economic development, while reducing reliance on international investment, the international currency markets and interest rate fluctuations at the same time. Research conducted by the IFC in 2022[4] highlights that “a well-functioning local institutional investor base may play a role in bolstering the economy” and “financing the ambitious development agenda ahead calls for an enhanced role for the region’s institutional investors.” Africa’s institutional investor base has become an increasingly important source of capital over the past few decades, having grown strongly and steadily accumulated assets under management. The IFC analysis found that pension fund AUM grew by an average of 65% between 2016-2020 across the seven African economies they looked at.
These investors have typically been very conservative in their investments, investing primarily in government bonds in their territory. The IFC research found that pension fund investment in “alternative assets” accounts for a very small share of assets; across five markets they found it accounted for between 0 and 2.7% of AUM. A lack of familiarity with and capacity to evaluate the associated risks, along with uncertainty over policy approaches to these assets, may be holding back allocations. But as seen with Ghana, excessive investment concentration in government bonds can carry its own risks. As a result, these investors are missing out on the opportunity to diversify and manage risk, as well as the opportunity to generate alternative sources of returns and create sustainable impact in their communities.
By diversifying their portfolios into other asset classes, including alternatives such as private equity and infrastructure, investors will mitigate against the risks associated with concentrated portfolios. Furthermore, private equity firms can be nimble and uncover opportunities that might not be immediately apparent. They can also target very specific social and environmental goals, mitigating risks for entire communities and contributing to their development, as well as creating financial returns for their underlying beneficiaries.
At Vital Capital, through our investments totaling around $300 million, we have provided 22.6 million individuals with solutions to meet their essential needs, diverted 1.04 million tons of CO2e through the use of renewable energy sources and supported 64,850 jobs and livelihoods. There is also a multiplier effect and contribution to development by stimulating further growth through the knock-on effect of investing locally directly and indirectly by creating jobs or generating local purchases. For each dollar Vital has invested in building capacity locally to stimulate local economic activity, it’s led to $2.50 of direct local purchases.
With little in the way of experience of investing in alternatives for many institutional investors in the region, the prospect may seem daunting. Some considerations to make when considering such investments include assessing alignment with investment objectives and target outcomes. This could be a return profile, types of investment, sector focus or an impact objective such as building and maintaining critical infrastructure, mitigating climate change or providing more affordable housing. When investing in impact funds, investors should look for alignment with international best practices and their impact measurement and management processes. Of course, track record is also important, both in terms of financial returns and the creation of meaningful, measurable impact.
An understanding of, and experience in, the local investment landscape is also essential. At Vital Capital, we focus on the sectors and countries we know and understand, and where we know we can make a difference – as well as returns – for investors. We also understand that a different approach might be required to the usual private equity model. For example, the normal three- to five-year investment period may not be the right time horizon for value to be created and realized.
Finally, investors should look for fund managers that are operationally minded and quick to adapt. During Covid, support for businesses in many parts of Africa was slow to materialize. As a result, otherwise viable businesses were left to fend for themselves, with many failing as a result. In contrast, we were able to step in quickly and, within 30 days, had put business continuity plans in place at all our portfolio companies. Furthermore, we put in place a $10 million direct loan facility, the Vital Impact Relief Facility, to help fundamentally sound SMEs through the immediate economic fallout from Covid.
By embracing alternative assets, local institutional asset managers across Africa can better manage risk, diversify their portfolios, and contribute to positive social, environmental and economic development within their communities. With substantial assets at their disposal, this has the potential to be transformational for countries across Africa, making them more self-reliant and insulated from the swings of macroeconomic and geopolitical events, creating more stable – and more sustainable – economies.
Institutional investors need to embrace alternatives, and alternative asset managers need to do a better job of explaining the benefits and providing relevant investment solutions that meet the needs of this investor base.
Efforts to encourage more institutional capital to be invested locally are underway. For example, the Kenya Pension Funds Investment Consortium (KEPFIC), an initiative supported by the World Bank and US Aid, has brought together the country’s leading pension funds to encourage them to increase in their allocation to alternative investments. Such initiatives help with professionalization and resourcing to support allocation to alternatives, but it’s only one part of the puzzle. This needs to be followed elsewhere and accompanied by supportive legal and regulatory frameworks.
For example, regulators might consider introducing – and enforcing, where applicable – minimum allocations to alternative assets within their portfolios to encourage diversification. Furthermore, they might follow practices in Europe and elsewhere to limit personal responsibility for trustees of pension schemes for investment decisions. Here, it is common for pension scheme rules to include exoneration and indemnity rules for trustees where losses result from properly taken actions to ensure they aren’t held personally responsible – with liability insurance also available. This could and should be replicated for trustees of pension funds across Africa.
As the amount of assets managed by institutional investors in Africa continues to grow and the market matures, the role for alternative assets within portfolio construction is becoming more important, both as a means of diversification and risk, but also to the development of economies across the continent.
A version of this article was originally published in Africa Global Funds.
[1] https://thedocs.worldbank.org/en/doc/61714f214ed04bcd6e9623ad0e215897-0400012021/related/Ghana-Rising-Accelerating-Economic-Transformation-and-Creating-Jobs.pdf
Vital Capital is pleased to be named Private Equity Manager of the Year in the 2023 Environmental Finance Sustainable Investment Awards. Environmental Finance, a key source of sustainable investment news, conducts the awards annually to honor the world’s leaders in the impact and ESG investing space.
Vital was selected for this year’s prestigious award from a group of sustainably-focused global fund managers, recognizing the firm’s excellence in maximizing investment performance and our track record of achieving social and environmental impact. The award is a testament to the Vital team’s work and collaboration with thoughtful investees, who are impactfully reallocating capital toward the world’s most underserved populations. We are honored to be among the leading firms driving transformational impact for those who need it most.
“The entire Vital team is deeply proud to be recognized as Environmental Finance’s ‘Private Equity Manager of the Year,’ and I am especially pleased by what this award signals about the impact investing industry’s maturation,” said Managing Partner Nimrod Gerber. “Since our founding in 2011, Vital has insisted on the very real opportunity to achieve more: transformational impact for people who need it most and good returns for our investors.”
Read more about why Vital was selected for this year’s award here.
Vital Capital has again been recognized as an Emeritus Manager on ImpactAssets’ IA50 listing for 2023, underscoring our role as a pioneer in the impact investing industry.
The IA50 is the most recognized free database of impact investment fund managers. The annually updated list is considered the gateway into the impact investing world for investors and financial advisors, offering an easy path to identify experienced and emerging impact fund managers and illustrating the industry’s breadth around the world. As such, the IA50 is an invaluable resource for institutional and private investors, as well as their advisors and consultants.
It’s the ninth consecutive year that Vital Capital has been selected to the IA50 list. We are proud of this achievement, which demonstrates our continued commitment to generating positive impact through building successful, scalable businesses that solve critical social and environmental challenges and transform lives.
The full IA50 2023 list is available on the ImpactAssets website, and Vital Capital’s profile can be found here.
