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In brief: Invest in impact to mitigate emerging markets risk, says LP

'Climate, food, health, technology investments… often do not involve the same levels of FX risk,' says foundation investor.

Private equity investors in emerging markets may be more familiar with certain risks than their developed markets-focused peers: FX risk, for example. The rise of impact investing, and the expansion of this to include various investment mega-themes, is changing this investment dynamic, according to one impact-focused limited partner.

“The inclusion of climate, health and food in the area of ‘what could be impact’ has really expanded the universe,” Imraan Mohammed, head of impact investments at the Children’s Investment Fund Foundation, told delegates at the Impact Investor Global Summit in London on Wednesday.

“Climate, food, health, technology investments… often do not involve the same levels of FX risk, they do not involve the same levels of political risk, and I think probably and most importantly… exit risks are much less,” he continued.

While there are technical risks with such investments, “investors can see that where [they] are successful, [they provide] more risk-adjusted returns which are not whittled away by some of the FX impacts, or if you can’t exit.”