Global Health Investment Fund
The main purpose of the Global Health Investment Fund is to improve the quality of people’s lives in low-income countries though the eradication of preventable diseases. The Fund aims to achieve this by facilitating partnerships to offer a sound investment that will fund life-saving medical research and development.
Solving problems of the magnitude of pneumonia, diarrhea, malaria, meningitis and measles requires both improved access to existing interventions, as well as new and affordable medicines. The pipeline of new interventions currently under development has the capacity to save millions of lives each year and in doing transform human health globally. However, there is insufficient capital to fund the full pipeline of new products that are so desperately needed.
One key challenge has therefore been to devise a new source of capital to complement traditional philanthropy. Fortunately, many of the health products so needed by developing countries are also relevant in developed countries. The global market of these products creates the opportunity for these products to provide a financial return to investors.
This dynamic has created the opportunity for a new fund to be established - The Global Health Investment Fund (“GHIF”) which seeks to invest in late stage product development projects that are focused on improving Global Health, while also offering the potential for a financial return. The Fund has so far raised $108.3m and has a broad spectrum of investors and stakeholders that includes high net worth individuals, institutional investors (AXA, JP Morgan and Storebrand), strategic investors (GSK, Merck and the Pfizer Foundation), government backed funds (Grand Challenges Canada, IFC, KfW and SIDA) and foundations (Bill & Melinda Gates Foundation and Children’s Investment Fund Foundation). The Fund is managed by London based asset management firm, Lion’s Head Global Partners.
The main purpose of the Global Health Investment Fund (GHIF) is to improve the quality of people’s lives in low-income countries though the eradication of preventable diseases. The Fund aims to achieve this by facilitating partnerships to offer a sound investment that will fund life-saving medical research and development. Repayment is achieved via a combination of milestones and royalties. Investors benefit from a partial guarantee for up to 60% of their invested capital.
The GHIF has been made possible by a pioneering group of investors - including Grand Challenges Canada (funded by the Government of Canada), HANSHEP member the German Ministry for Economic Cooperation and Development (acting through KfW) and the Children’s Investment Fund Foundation – which together made a commitment of $94 million to the Fund in 2013 to help advance the most promising interventions to fight challenges in low income countries such as malaria, tuberculosis, HIV/AIDS and maternal and infant mortality. In addition to these anchor supporters, the Fund’s investor group also includes organizations such as the International Finance Corporation (HANSHEP member), GlaxoSmithKline, Merck, The Pfizer Foundation, Storebrand and JPMorgan Chase, in addition to qualified individuals and family offices. Finally, to help mitigate the risk of investing in the clinical development of new technologies, the Bill & Melinda Gates Foundation (HANSHEP member) and the Swedish International Development Cooperation Agency have committed to partially offset potential losses in the Fund, which will seek a financial return for investors by targeting high-impact technologies with public health applications in both developed and emerging markets.
The Managing Member of the Fund is the Global Health Investment Corp., (GHIC), a Delaware not-for-profit corporation. GHIC has appointed LHGP Asset Management (“Lion’s Head”) to serve as the Fund’s ‘Investment Manager’. The Investment Manager will identify and structure the Fund’s investments, and manage the day-to-day operations of the Fund. The Investment Manager will work closely with the Fund’s sponsor (ie, the Bill & Melinda Gates Foundation) and its diverse stakeholder base (governments, multilaterals, foundations, individuals and pharmaceutical companies).
The Fund will make investments that will provide capital for the development of global health products, via a form of ‘mezzanine’ debt funding, to Product Development Partnerships (PDPs), pharmaceutical companies, contract research organisations and government bodies. The intention is to provide companies with investments structured to accelerate the development of products to address global health challenges, and to complete projects they might otherwise not pursue.
If the Fund’s investments are successful, investors will receive a return of capital plus an investment return. Unlike a traditional mezzanine or private equity fund, the fund carry is not paid to the investment manager but will be held within a new not-for-profit entity and recycled back into global health research and development.
INVESTMENTS IN GLOBAL HEALTH CAN WORK
An example showing the success that can be achieved through investment in global health is the Meningitis vaccine MenAfriVacTM, developed specially for use in Africa with support from a PDP funded by the Bill & Melinda Gates Foundation in partnership with PATH and the World Health Organisation. The vaccine was launched in 2010 at a cost of less than USD $0.50 per dose, and over 100 million people in six sub-Saharan countries received the vaccine in less than three years hugely reducing the incidence of meningitis in the region – an excellent return on the investment.
GHIF has identified a ‘pipeline’ of potential investments, with products including drugs and vaccines against the full spectrum of global diseases including cholera, diarrhea, HIV, malaria, and TB, as well as products for improving global nutrition and family planning.
STRONG, INDEPENDENT AND PROFESSIONAL GOVERNANCE
GHIF investments will be sourced and structured by Lion’s Head – the Fund’s ‘Investment Manager’ – working closely with the Bill & Melinda Gates Foundation. Investments are also subject to the approval of an independent Investment Committee and a Charitability Oversight Committee. In addition, the fund leverages the expertise of its investor base via an Investor Advisory Committee, and a Scientific Advisory Committee. Collectively, these committees constitute a robust investment review and governance structure for the Fund.
LHGP ASSET MANAGEMENT (‘LION’S HEAD’) – THE FUND’S INVESTMENT MANAGER
Established in 2008, based in London and Nairobi, Lion’s Head is one of the leading institutions in the design and execution of innovative financing for sustainable development. The founders of the firm, formerly employees of Goldman Sachs international, include the team responsible for setting up the International Finance Facility for Immunisation – a multilateral organisation created to fund the immunisation programs of the GAVI alliance in the world’s poorest countries.
Lion’s Head works closely with leading development banks, global health partners, sovereign donors and private foundations in the areas of climate resilience, food security, developing country energy and infrastructure, and global health.
LHGP Asset Management is authorised and regulated by the Financial Conduct Authority (FCA) of the United Kingdom.
The Bill & Melinda Gates Foundation, together with Sida of Sweden is providing GHIF investors with a loss protection of up to 60% of the fund’s capital via a guarantee. Under the guarantee the first loss up to 20% of invested capital is fully covered with investors covering 50% of any subsequent losses.
For more information, visit www.ghif.com