Sarona is a private equity firm, investing growth capital in companies and private equity funds in frontier and emerging markets with a particular focus in small to mid-market companies. Sarona is both a GIIRS Pioneer Investor and a Certified B Corporation. With 60 years of experience in private investments in frontier markets, Sarona has a sophisticated due diligence process in place to screen prospective fund managers. Nearly two years ago, Sarona integrated the GIIRS’ Fund Manager Assessment in its evaluation process to measure the impacts of potential investment funds. We spoke with Senior Partner Serge LeVert-Chiasson about this decision and how it’s been integrated into their evaluation process.
How would you summarize the value you get from using the GIIRS Fund Manager Assessment?
By asking fund managers to go through the GIIRS Fund Manager Assessment, we both add third-party credibility to how we’re meeting our impact thesis and identify areas of potential impact risk. The Fund Manager Assessment provides us with standard data covering topics like what type of companies, geographies and beneficiaries will be targeted for investment, what the investment evaluation process includes, and how the fund will manage its portfolio for impact over the investment lifecycle. The data from GIIRS and B Analytics is useful to our investors, our internal investment committee, and our fund managers.
What was the problem you were trying to solve by integrating the GIIRS Fund Manager Assessment into your due diligence process?
Sarona Asset Management has been investing in social investment funds for several decades, so we had developed our own internal tools and processes to measure impact along the way. Over the years we’ve observed that every fund has its own special sauce in terms of how it measures and demonstrates positive impact. When every organization has a different method for demonstrating impact, it becomes difficult for an investor to compare opportunities to one another with any confidence. Adding a third-party assessment to our due diligence process was Sarona’s solution to that problem.
How did the platform help address that need for comparability with investors?
The GIIRS Fund Assessment, along with access to data via B Analytics, gave us a standard set of impact data with benchmarks against dozens of other funds. The third-party credibility that comes with the GIIRS Fund Manager Assessment and B Analytics helps us validate our internal due diligence process with investors. It shows that our internal assessment strategy, while unique to our organization, is also relevant across the industry.
How do you use the data from B Analytics internally?
The GIIRS Fund Manager Assessment is additive to our internal assessment process. Our investment committee likes to see whether or not the GIIRS fund manager evaluation is in line with our own assessment of the opportunity. Between the two, we can come up with a consolidated, holistic interpretation of a fund manager’s view of impact and a much more valid and trustworthy understanding of the impact of a particular investment strategy.
How does the data from B Analytics affect your relationship with fund managers?
For each fund, we use the data from the Fund Manager Assessment and the broader benchmarks to understand whether the fund’s performance is average, above average, or below average in terms of impact. If a fund is below average, it doesn’t necessarily preclude them from receiving an investment, but it facilitates a conversation with the fund manager to discuss why they didn't perform as well, and it signals that we may want to watch that fund's investment approach more closely going forward if we do make an investment.
Has your investment process changed since you started using B Analytics?
To date we’ve used the GIIRS assessment as an addition to our due diligence process with funds when we’re already pretty confident we will make an investment. We’re now considering integrating the GIIRS Fund Manager Assessment into our active portfolio monitoring process in order to track changes in the impact thesis over the lifetime of the funds we invest in. Ideally, we’d like to see those scores go up over time as we work with fund managers to maximize the social and environmental impact of their investments.
Our investment committee likes to see whether or not the GIIRS fund manager evaluation is in line with our own assessment of the opportunity. Between the two, we can come up with a consolidated, holistic interpretation of a fund manager’s view of impact and a much more valid and trustworthy understanding of the impact of a particular investment strategy.Serge LeVert-Chiasson, Senior Partner at Sarona Asset Management
Sarona Asset Management
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