Mid-year review: ‘Some very attractive opportunities’ are emerging for GPs with capital, says Carlotta Saporito

Carlotta Saporito, head of impact investing at JPMorgan Private Bank, reflects on the first half of 2023 and looks forward to H2 as part of our mid-year review series.

How would you characterise the fundraising market in H1 2023?

Impact investing has gained impressive and exciting momentum over the last few years. Investors recognise the power that investment in private companies can have in helping the transition towards more sustainable and inclusive economies. We’re encouraged by the trends that we’re seeing. However, impact strategies have not been immune from the broader turbulence in fundraising so far in 2023. Managers with strong track records are still able to raise funds, but the pace is generally slower, with funds staying open for longer. Like elsewhere in the market, the levelling out of valuations across sectors is translating into some very attractive opportunities for managers that have capital to deploy.

Which impact themes, sectors or strategies do you see as being most exciting and untapped?

We see interesting pockets of opportunity across several impact themes, particularly in the climate solutions space. Here, investors in private markets can access companies taking proven technologies or processes to scale, offering solutions to support the transition towards less carbon-intensive ways of doing business. This is particularly true today in areas like agricultural technology, energy efficiency, sustainable water use, alternative fuels and materials, and the renewable energy transition. Carefully selected, we believe private market opportunities have the greatest potential for a sustainable future while aiming to provide healthy returns.

Outside of climate investing, there is a focus on improving access, quality and affordability in healthcare and wellness. Spending on healthcare is rising along with the increase in global and aging populations, yet this is the one area where increased amounts of spending have not translated into commensurate improvements in delivery of care. Areas where we’re seeing innovation really address barriers to access include innovative methods of bringing healthcare to rural populations, increased focus in life sciences on unmet medical needs, and the use of technology to drive efficiency in hospital and clinics, in the context of global shortages of healthcare professionals.

The final area where we think there are the most interesting opportunities is inclusive growth. These are the strategies at the forefront of aiding the shift towards equal economic opportunity through access to financial services, quality education and training, and promoting inclusive business practices by investing in human capital. Ultimately, the foundations of economic growth rest on a skilled workforce. From online tutoring platforms to artificially enabled classrooms and teachers, the intersection between education and technology provides a lot of potential for private companies who can meet this global demand.

Do you use benchmarks to evaluate your impact and why (or why not)? 

Evaluating impact must be a constant exercise. Our approach is to gain a holistic understanding of how capital is generating positive outcomes, alongside financial returns. This means that we evaluate investments through regular data collection to quantitatively demonstrate impact but also manager engagement on measurement practices.