GHIF’s main purpose is to improve the quality of people’s lives in low-income countries through the eradication of preventable diseases. This new $108mm USD Fund aims to achieve its purpose 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 fund was developed by the Bill & Melinda Gates Foundation, Lion’s Head Global Partners and JPMorgan Chase & Co. to catalyze investment activity that can deliver new technologies to address urgent global health challenges and improve livelihoods around the world.
An introduction to GHIF
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.