Left to right: Geetha Tharmaratnam, chief impact investing officer at the WHO Foundation; Carola Bose, head of Africa at DEG; Ginette Borduas, head of ESG and sustainability at Meridiam; and Simon Whistler, head of real assets at the Principles for Responsible Investment

European impact investors will likely be sticking with GPs headquartered in Europe to deploy capital to Africa.

The World Health Organization Foundation seeks funds based in markets “that have a sufficient ecosystem to manage the process of the fund itself”, said WHO Foundation’s chief impact investing officer, Geetha Tharmaratnam, speaking at the African Private Equity and Venture Capital Association’s Sustainable Investing Summit.

DEG, Germany’s development finance institution, usually invests in funds based in Europe and “typically not based in Africa”, said Carola Bose, head of Africa funds at DEG, who was also on the panel. DEG needs its GPs to work within “a very defined legal framework [to] efficiently make and manage investments, and these frameworks do not exist for private equity funds in emerging markets to the level [necessary] for international investors from several jurisdictions to operate.”

Bose cited a past investment with an Ethiopia-domiciled fund for which “we had very, very big problems of getting the money in and out”. She said: “I think local impact strategies, if they exist, are more interesting for the local institutional investors, not the international institutions.”

Overall, GPs’ headquarters are low on Tharmaratnam’s priority list. “I am far more interested in seeing capital calls come in, and where and how the money is being deployed,” she said. Most of the profits from private equity funds “go back to wherever the investors are based”, rather than staying in the emerging markets where the fund’s portfolio companies are based, she added.