Black-owned infrastructure investor and asset manager Thirdway Investment Partners, together with Maia Capital, has launched a R3bn impact fund to help bolster the economy after the fallout of the Covid-19 pandemic. Maia Capital is a financial services firm that facilitates high-impact investment opportunities for investors. Thirdway Investment Partners chair John Oliphant talks to Business Day about the Maia Debt Impact Fund I and its attempts at resetting and building an inclusive and resilient economy.
What informed the decision to launch the fund and what does it aim to achieve?
Our track record has been around impact investing. Looking at Covid-19, we realised that there were a lot of companies that were closing down because of Covid-19. Not because their business models were wrong, but because there was a sudden stop in economic activity as a result of lockdowns. We felt there was a need to look for conscious capital, to look for opportunities to preserve jobs and to ensure that, as we accelerate out of Covid-19, our growth is more inclusive. We have partnered with Maia Capital and the focus is going to be on looking for opportunities in education, health care and social housing, financial inclusion, gender inclusion and so on. It’s almost like conscious investing with very clear outcomes, with a focus on sustainable development goals in making sure that we are able to achieve those by 2030.
When do you plan to disburse the first tranche of the capital?
We have a solid investment pipeline. We are already reviewing investment opportunities and hopefully we will conclude transactions before the end of the year. We will be facilitating for our clients to put in about R3bn towards that so that we are able to be active in the economy.
In what sectors are you looking to invest?
We’ve chosen sectors that we believe have the biggest impact that we desire. Clearly the real impact of Covid-19 is going to be an increase in inequality. People are going to lose jobs.
First, we are a debt fund; we will be providing debt to those opportunities, and the sectors we are focusing on will be social infrastructure, education, health care and affordable housing. They are going to become the key areas that we’re going to focus on, including technology. And that’s because we are driven by the sustainable development goals.
We say that to ensure we don’t fall behind in terms of the fourth industrial revolution, one of our areas will be looking for opportunities in the technology space. The overarching perspective is that when people want to stimulate growth, they will focus purely on growth; the danger of focusing on growth without looking at the quality of growth is that growth doesn’t mean you’re addressing inequality.
There have been funding opportunities and funds established for much larger, too-big-to-fail companies. Are you looking at funding small businesses?
If you look at Thirdway, you’ll see that we are a very entrepreneurial group. Effectively, we are a strong believer in start-ups and building real businesses that have a direct impact on the economy. That’s why when you talk about small businesses, we understand entrepreneurial pain and we also understand the capital patience. You need to be patient, you’re not chasing quick wins, you need to back the right businesses within the framework that we have defined.
We want companies that have gone through that J curve and because of Covid-19 have been affected negatively, and we’re trying to save them and make sure that they are able to keep their head above water for the long term.
What are some of your concerns about the economy as well as how the government is reacting to the impacts of the coronavirus on the economy?
Covid-19 hit us when we were in a far weaker position than we were when we faced the global financial crisis. Heading to Covid-19, our final position was also not great having been downgraded by all big agencies, which means our recovery is unlikely to be led by government because it doesn’t have money.
We can’t really continue to allow our debt position to continue to rise at the rate at which it is. Our only way out, as far as I am concerned, is that government must create a conducive environment for the private sector to contribute meaningfully towards growth.
We also have to deal with the levels of mistrust between business and government because business shouldn’t take the weak position of government as a licence for them to reverse the transformation agenda. Our businesses still need to be transformed. We can never grow the country on a sustainable basis unless corporate SA is transformed and reflects the majority.
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