Mr Leshwyn Raj, 30, is among a growing number of investors – both retail and institutional – who no longer subscribe to the notion that money is the root of all evil.

“If I could grow my money,” he says, “while contributing to meaningful change in the world, why not?”

Mr Raj is referring to impact investments that seek to generate “tangible social good” – positive, measurable social and environmental impact – alongside financial returns.

He began his investment journey for a deeply personal purpose: to uplift his family’s living standards. Growing up poor, Mr Raj’s drive to invest stemmed from a desire to “never be in that position again”. 

The flight attendant, who is single, earns about $5,000 a month and has been investing almost half his salary for the last seven years. 

Now, like other millennials, Mr Raj is seeking to expand his portfolio to include stocks that align with his values to uplift lives, and make a positive impact.

Since coming across the concept of impact investing a few months ago, Mr Raj has been researching green energy stocks and aims to allocate 10 per cent of his portfolio towards these investments. 

His view is shared by millennial investors (aged 28 to 43) across the Asia-Pacific, says a 2023 survey by UK-headquartered investment firm Fidelity International.

Among all age groups, millennials had the highest percentage of people who believe that their investments can be a force for good.

And the demand is growing. Global Impact Investing Network (GIIN), a US-based non-profit, estimated the size of the global impact investing market to be US$1.164 trillion (S$1.57 trillion) in 2022, topping the US$1 trillion mark for the first time. 

Institutional investors, too, such as UOB Venture Management (UOBVM), are keeping their eye on impact investments. 

Established in 1992, UOBVM provides financing to privately-held companies in South-east Asia and China. It has over $2 billion in assets under management.

In 2015, UOBVM launched its first impact fund, Asia Impact Investment Fund (AIIF) I.

The fund aims to improve the livelihoods of those living at the base of the pyramid (BoP) in South-east Asia and China (defined as the segment of the population living on US$3,000 or less per year).

In 2022, UOBVM’s second impact fund, AIIF II, closed at almost double the size of AIIF I. 

AIIF’s mission: To invest in private companies that bring commercially scalable, and often disruptive, solutions to solve social challenges of the BoP population or improve their livelihoods. 

“We believe the private sector can play an active role in addressing social and environmental challenges, and we seek out companies that are aligned with us,” says Mr Seah Kian Wee, chief executive officer of UOBVM.

What motivates UOBVM to continue its drive in this cause? Three factors: Markets in need, measurable impact, and money opportunities.

Markets in need 

Why the focus on this region? Because of the large low-income population of more than 600 million who are underserved in key essential services such as education and healthcare, says Mr Seah. 

For example, youth from low-income families in Indonesia tend to have limited access to quality education resources and teachers.

One of UOBVM’s investee companies is Indonesia-headquartered Ruangguru. The edtech platform provides affordable, quality educational content and services to help level the playing field for youth from rural areas.

“Many students have seen an improvement in their school results and university admission rates after learning on the platform for at least a year,” Mr Seah says. 

Ruangguru has since expanded to Vietnam. It now serves over 20 million users. 

Over the next five years, impact investors globally are looking to increase their investments in developing markets, says a 2023 report by GIIN.

This is a shift from previous years, where impact investors have predominantly focused on developed markets such as the United States and Canada. 

Measurable impact 

From improving livelihoods to environmental conservation, and access to services such as healthcare and education – the goals of impact investments are complex and diverse. 

How does one then measure the impact? UOBVM uses a mix of proprietary assessment tools and global frameworks and best practices, Mr Seah says. 

In 2019, UOBVM was the first in South-east Asia to be a signatory of the Operating Principles for Impact Management.

Created by the US-based International Finance Corporation, the global framework ensures that impact considerations are purposefully integrated throughout the investment life cycle. 

These are supplemented with quantitative and qualitative measurements customised to each portfolio company, says Mr Seah. “UOBVM is also active on the ground, engaging with beneficiaries directly to have a deeper understanding on the impact created.” 

Timeframe is a common challenge for impact investors, a report by US professional services company Accenture, Singapore Management University and the Centre for Impact Investing and Practices (CIIP) reveals. CIIP is a non-profit centre established by Temasek Trust in 2022. 

It helps to understand that the timeframe for impact returns can vary widely across different industries, says Mr Seah. 

“For example, investments in the technology sector have the potential to realise both impact generation and financial returns within a shorter time frame.

“Meanwhile, industries such as agriculture typically require a longer timeline as their business cycles are shaped by factors such as long crop cycles.”

Money opportunities and beyond 

A key question on the minds of impact investors: What kind of financial returns can I expect? 

It depends, says Mr Seah, noting that some impact-first investors are willing to accept lower financial returns relative to positive social or environmental change.

That said, the majority of impact investors expect market-rate returns, says a 2023 GIIN report. “But it’s not just a (monetary) numbers game when it comes to impact investing,” says Mr Seah. 

UOBVM’s portfolio companies have impacted over 37 million people in South-east Asia and China through their operations, he adds. 

Healthcare is one of the sectors with the widest reach in terms of the number of beneficiaries.

To date, more than 4.4 million people in South-east Asia have benefited from healthcare services offered by UOBVM’s portfolio companies. 

One example is Indonesian digital healthcare platform Halodoc, launched in 2016. It seeks to bring timely and affordable healthcare services to those living outside the city area. 

Halodoc’s mobile application connects users with over 20,000 licensed doctors for teleconsultation.

Patients living in rural areas can make an appointment online and consult with specialist doctors – primarily located in large cities – within minutes.

By the company’s own estimates, using Halodoc to access healthcare services can be up to 80 per cent cheaper than seeing a physical doctor. 

This is the 11th of a 12-part series in partnership with