The Guy’s & St Thomas’ Foundation, a £1 billion ($1.2 billion; €1.2 billion) hospital endowment, has increased its target impact allocation to 10 percent of its total portfolio. GSTF plans to invest approximately £25 million each year, and £100 million by 2026, into “funds focusing on health and its social determinants”.
The foundation is taking a “total-portfolio” approach to achieving its impact and returns goals – meaning it is open to investing in high-impact, concessionary-returns-target funds and high-returns-target, concessionary-impact funds, GSTF investment director Anita Bhatia told New Private Markets. These two types of fund investments should balance each other out in GSTF’s portfolio, said Bhatia: “Our impact investments vary in their impact and returns but at the portfolio level, collectively our investments should result in strong returns and strong impact.”
GSTF launched an impact investing strategy in 2018 with a 5 percent target allocation across asset classes. It has invested £22 million into impact funds so far. Bhatia said: “Siloed approaches don’t work. Initially, we sought high impact and high returns for every investment we looked at,” said Bhatia. “But we realised that we were missing out on many opportunities such as those presenting very high impact but with concessionary returns. At the other end of the spectrum, we came across opportunities that didn’t quite hit the bullseye mark for impact but were clearly targeting high returns.”
It is too early to determine the financial performance of GSTF’s current impact portfolio, said Bhatia, “but earlier investments are projecting strong returns”. GSTF’s private equity impact fund investments are targeting “private equity or venture-level returns. We’re not seeing any trade-offs,” said Bhatia. And at the portfolio level, “we are confident that our impact portfolio is on track to deliver attractive returns alongside the expected impact.”
GSTF is seeking UK-focused funds addressing life sciences and medical technology as well as social themes such as sectors including healthcare innovation and delivery, affordable housing, environment, food, and nutrition, and community infrastructure access to education, employment and training, community infrastructure and transport, financial inclusion and food. The foundation aims to “improve health for everyone, but especially those who experience health inequalities the most,” said Bhatia. “Indisputably, there is a lot of research and evidence that shows that the social determinants of health – where we grow up, where we live and work – all impact our health and can be more critical for our health and wellbeing compared with the treatment we get in a hospital.” So GSTF is focused on addressing structural social inequalities for “disadvantaged or underserved communities, such as communities living in our densely populated, urban boroughs of Lambeth and Southwark” – the boroughs where GSTF is based, said Bhatia.
This article has been amended to reflect that GSTF is independent from the NHS.