LP Connect

01. It is exciting to see an Indian family office with such strong impact intentionality and focus! Can you tell us a bit about your perspective on allocating capital across the ESG-Impact investing-Philanthropy continuum?

Raintree Family Office is a single-family office committed to tackling India’s chronic social issues through a hybrid model of a socially conscious investing arm and a private philanthropic foundation.

We built our hybrid model keeping in mind the capital continuum - at one end we make investments in growth-stage companies with sustainable, profitable & innovative ‘ESG conscious’ business models and at the other end we have Raintree Foundation, which is our family foundation focused on delivering impact through catalytic philanthropy.

We strongly believe that investing that generates social and environmental impact alongside financial returns is the only way forward and that ‘Capital’ can change the world.

Our investment portfolio is diversified across ESG conscious alternative assets as well as public market equities. We make impact investments in pro-ESG and innovative for-profit enterprises that address critical social/environmental issues. We have an exclusion list of sectors that we avoid which we perceive as harmful to the environment and society.

And last, we deploy catalytic philanthropic capital through Raintree Foundation that pools together a mix of resources from the ecosystem to create successful and scalable community-led programs that address rural and urban India’s chronic social and environmental issues.

02. How has your overall investing experience in the sustainability space, both from an ESG as well as the impact investing space been?

Being new to the sector, we took our time to first learn more about the ESG and Impact space. We met with industry experts who guided us on aligning with global best practices in ESG and impact investing. We have built a small, dedicated investment team that has over the years built a proprietary investment process and framework that evaluates all investments through multiple filters. We have also been actively connecting with fellow conscientious investors and family offices charting a similar path.

Over the last few years, we have made several investments – the most recent being in Smart Joules who offer digitally-enabled energy services for industrial and commercial partners.

03. What makes the impact investing space attractive to you? Do you think of yourselves as a returns first investor or an impact first investor? Is there scope for impact first investors in India who are willing to forsake returns for disproportionately high impact?

It is always great to see for-profit investments providing yield not only to investors but to the environment and society. While the Western world has adopted these practices, India is slowly beginning to catch up and make waves in the sector, and it is a privilege to be a part of it.

At Raintree, we do prioritize returns first which is why we are open to ESG investments and not necessarily just impact. Our impact investment philosophy is simple: We want to partner with businesses that are changing the rhetoric, moving the needle from ‘doing no harm’ to ‘consciously doing good’ in measurable and quantifiable terms.

04. Owing to the pandemic, has there been any significant alteration in your sectoral focus and investment strategy? A few sectors of your interest are Agriculture, Clean Energy, Financial Inclusion, and Healthcare. We see that you are already present in the climate change investing space. What other emerging sectors and spaces would you consider investing in?

I don’t think it has changed our investment philosophy or sector focus as such. We seek opportunities in innovative businesses. Our preferred sectors are technology (AI, IoT, Industry 4.0, software products, solutions & services), advanced manufacturing, consumer, financial services and fintech, healthcare, pharmaceuticals & life sciences and sustainable industries. That being said, we are also sector agnostic should the right business prove their mettle.

05. While your organization is actively engaged in impact investments, most other family offices do not have a strong presence in this space? What do you think are the major reasons?

We are seeing global trends in the investing space pointing towards impact and ESG which has undoubtedly influenced Indian investors as well. While there are a few family offices actively participating in the impact space, we can rest assured that this trend will continue to grow over the years.

With impact investments generating competitive returns, there is a greater incentive to be involved. For those who have never ventured into the space, success stories from impact enterprises will surely be inspirational and will help mobilize more investments.

Companies and investors across the world are realizing that being ‘Pro-ESG’ is not a sacrifice. There is enough research that proves that it makes great business sense and ensures the company is well-governed, sustainable, and positively resonates with all stakeholders. This realization is sure to take root and encourage all investors to take a closer look at the space.

06. What can the ecosystem of impact funds, wealth managers, and impact entrepreneurs do better to engage and receive funding support from India’s family offices?

The IIC has a large role to play in awareness generation and advocacy – right from setting up a common vocabulary to setting up standards and norms relevant to India. In addition, Wealth Advisory firms and Wealth advisors need to educate and inform their clients (HNIs and Family Offices) on the continuum of impact and help create impact portfolios. Family Offices can lead the way for Impact investing in India, given that they deal with domestic capital and have the advantage of being flexible when it comes to capital allocation.