THE PHILIPPINES

Our fund’s sole focus is the Philippines. It is an investment grade country recently cited as 2018’s best country to invest in according to a study by US News and the Wharton School of Business, and it is at the cusp of an economic boom that can be truly inclusive. However, the Philippines is also one of the poorest nations in ASEAN with over 13% of the Filipino people – primarily farmers and fisherfolk – living under the international poverty line.

Like South Korea in its early days, development in the country has been primarily concentrated in the metropolitan areas, leaving a plethora of undervalued and underpriced assets untouched. These assets can be monetized by companies that are inherently impactful and merely need capital and expertise to grow throughout the country and the region. Legacy infrastructure in regions that have high poverty incidence are outdated or virtually non-existent. This is an unparalleled opportunity to invest in the entire country’s broadband network, giving rise to enabling innovations that will modernize agriculture and mariculture, provide access to healthcare and education. Moreover, it will disrupt the country’s feudal organizations by bypassing traditional brick-and-mortar costs of banks, education, healthcare, agriculture, and retail.

Where others see crisis, we see the opportunity to capitalize on the country’s forward momentum and make comparable impact and returns to any global impact investment fund[1]. Investing for impact will reap the benefits of the country’s growing educated population, continued economic growth, and stable financial markets.

[1] The Impact Investment Market in South and Southeast Asia. February 2017. Palladium & Australian Aid.

OUR IMPACT THESIS

The Philippines has had a long struggle to transform into a developed country. We believe that a vital part of this transition involves disrupting its traditional relationships, processes, policy, and regulatory constructs. This is the keystone to building a better future for all Filipinos and providing better goods and services to a world grappling with climate change.

For decades, the Philippines has been characterized by grave social disparities and the increasingly opportunistic behavior of its oligarchy. We believe that a class of political and economic elites are only part of the problem. The root cause of the country’s lackluster performance is the economic cost of distrust. Filipinos have the least trust in each other and in local institutions, based on the most recent data from the World Value Survey in 2014. The cost of this pervasive distrust is best visualized when trust is plotted against our 2014 GDP per capita.

We believe that the Philippines is caught in a vicious cycle of distrust that hampers its economic growth. Filipinos’ high distrust in each other and in Philippine institutions curtails investment in early stage companies. This results in fewer successful SMEs or investment in SMEs whose business models may not be ecologically sustainable. In turn, this exacerbates the lack of trust that has plagued Philippine society for decades and is the root cause of poverty.

Decreasing extreme poverty is essential to breaking this cycle. Poverty is not merely the absence of money. It is the pervading presence of powerlessness and despair. We assert that the best course of action is to empower the poor via impact investments, and not charity. Empowered people become agents of change in their own lives and actors of their own development. Job creation alone will not eradicate poverty. It is creating the right kind of jobs in high impact enterprises that will strengthen opportunities, enable access to resources, and break down the barriers erected by poverty.

We refuse to let the distrustful actions of the few, dictate how we invest.