 "'In the future, we'll look at education and health care'")
An MBA by training, Marilou Van Golstein, 58, quit her job in a private bank to join Triodos in 1990 — a tiny bank with a ‘different purpose’ at half her old salary. Marilou led the first fund (a small fund of around 10 million guilders) for the bank after she joined in 1990 and is now the chair of the board of investment management. Today, Triodos is one of the largest impact investing banks in the world with a Euro 3.1 billion as total assets under management (800 million in emerging markets) across 65 countries. India is not new to Golstein who has spent five weeks working with Mother Teresa’s home in Kolkata in 1993. She has seen India’s poverty up close and been deeply affected by it. She also counts Ela Bhatt as one of her role models. India was, therefore, very much on her agenda. Besides investing directly in Ujjivan and Sonata, Triodos has invested in two funds of Caspian and is looking at investing in a third fund. Golstein was in India to attend the first impact investment conference organised by the Impact Investment Council in Gurgaon.
Excerpts from an interview with Anjuli Bhargava:
What do you include in your biggest successes in terms of impact in emerging market?
I would count Acleda Bank in Cambodia, which is into inclusive finance. We were one of the early investors. It was at a time when a lot of people had fled the country to escape the Pol Pot regime. Four such people who studied in the US during that time came back to set up something in their country.
Although they first started as an NGO, later they decided that for real impact they needed to convert into a bank. With over a million and a half depositors now, they have made a huge impact in the country – in the area of education, creating a movement against corruption and bringing in more ethical practices. In terms of impact, I count it as one of our big successes.
We also financed a company in Egypt that is into organic agriculture. Through very refined irrigation methods, they have converted desert land into very fertile farm land. Now they even make baby cotton clothes, which are exported. They have a pharmaceutical company based on herbs. A university on sustainable development has also been started. It’s a whole conglomerate and a delight for us to see. This is despite the country going through a very difficult situation.
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What all are you looking at in India?
We work with funds and we work directly. In inclusive finance, we usually prefer working directly and we have done that with Ujjivan and Sonata in India.
But, we also work with funds when we feel we need to be really close to the businesses. Caspian is raising its fourth fund – it is largely to invest in agriculture and renewable energy. In these areas, it is critical to have your ear to the ground. So it may be better for us to go through a fund like Caspian.
Why is so much of impact investment in micro finance – both globally and in India ? Why are education, healthcare and other sectors lagging?
It’s changing albeit slowly. When we started 20 years ago, there was very little micro finance. So, it was new and a chunk of the funds went into it.
Out total portfolio in emerging markets is $800 million at present. Two-third is in inclusive finance and one-third is in agriculture and renewable energy. We want to increase these two.
In the future, we’ll look at education and health care. In both these areas, it is still hard to find the right business model that can work commercially as these services are not as easily paid for. It’s not as straight forward.
What kind of projects do you finance in Europe? I would think emerging markets would attract a majority of the funds with their plethora of problems...
Well, it’s very different but there are problems to be tackled everywhere. There is increasing exclusion in Europe, too. Especially with immigrants and other minority communities. Access to education and work is low for immigrants across Europe.
Who would be Triodos’ closest competitor in emerging markets?
Responsibility (responsAbility Investments) invests only in emerging markets so they would be much bigger than us (in emerging markets). I think they have around Euro 3 billion in emerging markets. They do inclusive finance, agriculture and renewable energy.
What are some of the challenges you see the impact sector is facing?
One challenge is of over-promising. There’s this whole debate on whether impact investing can deliver market returns. Personally, I think it can but you have to see sector by sector. You can’t always expect it to generate private equity kind of returns.
But, isn’t that the point? If investors want it to generate the same kind of returns, it defeats the purpose. It is heart over head, isn’t it?
Yes, that’s true. But, many funds tend to over-promise and claim there is no trade-off. Also, it depends; in micro finance, we have made great financial returns. When it’s almost virgin territory and there is little competition, your chances of making very good returns are quite high.
A second risk is when you attract investors who come in only for the returns and don’t care much about the social mission, you run the risk of losing sight of the main goal. This happened, for instance, in Andhra Pradesh (SKS Finance). It’s important to focus on the needs of the clients.
Third, in this time and age, you cannot work with a single focus anymore. We live in an increasingly complex and interconnected world where you have to work with climate change and the environment, poverty, inclusion, agriculture – keeping a whole host of factors in mind. The approach to everything has to be more holistic. If you don’t have a holistic approach, risk of failure is higher. There is no point in solving one problem and creating another.